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“The United States of America (United States) and India .. announce(ed) that they have reached a framework for an Interim Agreement regarding reciprocal and mutually beneficial trade (Interim Agreement)”. “It will include additional market access commitments .. commitment to reciprocal and balanced trade ..” “India will eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products, ..”. “The United States will apply a reciprocal tariff rate of percent”. “India intends to purchase $500 billion of U.S” and “… further expanding market access opportunities through the negotiations of the BTA”. Finally, “The United States and India will promptly implement this framework and work towards finalizing the Interim Agreement with a view to concluding a mutually beneficial BTA”.

In brief, now a ‘framework’ for Indo-US trade has been announced. This is supposed to lead to the “Interim Agreement” by mid-March and later there will be a “mutually beneficial BTA (Bilateral Trade Agreement)”.

In other words, only a broad understanding has been reached but the details are being worked out. So, what is announced now can be changed. Given that the deal is one-sided, the likely changes will also be in favour of the US. India’s willingness to bend over backward to have a deal can be used to further coerce India for even better terms. The example of S Korea is before us. US threatened to change the deal under the pretext that it was not fulfilling its commitments.

India is committing itself to ‘balanced trade’, that is, India’s existing trade surplus has to be eliminated. That would force India to reduce its exports and/or increases its imports from the US. India’s exports are likely to decline due to the imposition of protectionist tariff of 18% by the US. Earlier the tariff was an average of 2.5%. So, the price of........

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