The India-US trade pact is “done and dusted” and can be executed once the United States gives India the right competitive advantage over its rivals in the American market, Commerce and Industry Minister Piyush Goyal said on Thursday.
India and the US had announced in February that they had finalised the framework for the first phase of the bilateral trade agreement (BTA). However, changes in the US tariff landscape have led to further negotiations between the two sides.
Goyal said India has finalised nine free trade agreements and counted the US pact among those that are “almost done and dusted”.
“We have to find the right comparable competitive advantage over our competitors, so that we can quickly execute the agreement,” he said.
His remarks come ahead of his visit to the US for the G20 Trade Ministerial in Milwaukee, Wisconsin, from September 30 to October 1. Goyal is also expected to hold a bilateral meeting with US Trade Representative Jamieson Greer, where progress on the trade negotiations is likely to be discussed.
Goyal also highlighted what he described as gains secured by India under the India-EU trade agreement, particularly in response to new European climate and trade regulations, including the Carbon Border Adjustment Mechanism (CBAM) and Deforestation Regulations.
He said India had secured additional steel quotas for domestic exporters as well as a USD 500 million commitment towards climate finance, with more support expected in the future.
“Even now when they (EU) wanted to restrict steel exports, we have extracted our pound of flesh and safeguarded so much of our agriculture and other sectors and we got a huge extra steel quota. We got another $500 million commitment on climate finance. It is the beginning; there will be much more coming,” Goyal said.
India has secured zero-duty market access for more than 90 per cent of its steel exports to the European Union under the India-EU FTA, with opportunities to export up to 2.8 million tonnes of steel through various quota arrangements.
Speaking about EU regulations, Goyal said the number had increased to 73, but argued that the regulations would also create significant business opportunities for Indian industry.
He said tighter regulations in Europe could increase production and living costs and give Indian businesses a cost advantage.
Goyal said European companies would have greater incentive to manufacture in India, which he described as a “trusted geography” where technology, intellectual property and investments would be safe.
Goyal said negotiations were also progressing with several other trading partners.
Canada is making fast progress, he said, adding that he met Canada's Minister of International Trade Maninder Sidhu in Mumbai last week. According to Goyal, both sides resolved issues aimed at giving greater political momentum to the negotiations.
“When ministers get into the act, then we conclude agreements,” he said.
On Mexico, Goyal said the Terms of Reference (ToR) for negotiations had been finalised. Commerce Secretary Rajesh Agrawal is expected to travel to Mexico next week to take the process forward and formally launch negotiations.
The first round of negotiations with the Gulf Cooperation Council (GCC) is scheduled for October. The Terms of Reference for the FTA were signed in February this year.
On Chile and Peru, Goyal said the Comprehensive Economic Partnership Agreement (CEPA) with Chile could be concluded soon, while an agreement with Peru may take longer because of competition and competing interests.
The developments come as India seeks to expand its FTA network amid growing uncertainty over tariffs and non-tariff barriers.
Goyal said India's FTAs would eventually provide preferential access to markets accounting for around 75 per cent of global GDP, highlighting the government's strategy of using trade agreements to expand market access for Indian exporters.
Goyal also criticised earlier governments for participating in negotiations for the Regional Comprehensive Economic Partnership (RCEP), arguing that the agreement would have effectively resulted in a trade pact between India and China.
RCEP was negotiated among the 10 ASEAN members — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam — and their six free-trade partners: Australia, China, India, Japan, South Korea and New Zealand.
India decided in 2019 not to join RCEP, citing concerns that the agreement did not adequately address its interests. There has been no change in that position since then.
Goyal said India already had trade agreements with ASEAN, Japan and South Korea and was negotiating with Australia and New Zealand at the time.
“China was the only other country. So, effectively, RCEP negotiations that we entered into voluntarily would have given us an FTA between India and China,” he said.
Goyal said developing a direct shipping route remains a challenge for India and would require major changes in the country's maritime regulatory infrastructure and ecosystem.
He said the government was working to encourage more companies to flag their vessels in India and provide what he described as the “best registry in the world” for companies choosing to do so.
“We are working on that; it's a work in progress,” he said.(With agency inputs from PTI)