Written by Shivangi Acharya
India to increase purchases of US oil, arms, aircraft; Open access to some farmsNEW DELHI, — India has agreed to buy petroleum, defense equipment and aircraft from the United States, partly while opening up its highly-protected agriculture sector under a trade deal, according to a government official, as the two sides reconciled after months of tension.
President Donald Trump announced a trade deal with India on Monday that reduced US tariffs on Indian goods from 50% to 18% in exchange for India stopping buying Russian oil and reducing trade barriers.
Trump said India had agreed to buy more American goods and increased purchases by $500 billion, including energy, coal, technology, agriculture and other goods.
As part of New Delhi’s commitments under the deal, India has agreed to buy US products, including telecoms and pharmaceuticals, and offered market access for some agricultural products, an Indian government official said on condition of anonymity.
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India recently offered selective market access for agricultural products to the European Union under a trade agreement.
The Asian country has also reduced tariffs on imported cars to meet Washington’s immediate demand for the US to complete the first phase of the deal, the official added.
India’s commerce ministry did not immediately respond to an e-mail seeking comment.
India’s exports to the US rose 15.88% year-on-year to $85.5 billion in January-November, while imports rose to $46.08 billion, Indian government data showed.
“The commitment to buy US products covers sectors such as pharmaceuticals, telecom, defence, petroleum and aviation. It will be done over a period of years,” the official told Reuters.
The official said a more comprehensive deal with the United States would be negotiated in the coming months.
The deal lifts sentiment
The announcement of a trade deal between India and the United States has largely eased global uncertainty, India’s Economic Affairs Secretary Anuradha Tagore said at an event in New Delhi on Tuesday.
It also lifted investor sentiment. India’s benchmark stock index, the Nifty 50, rose nearly 3% and the rupee rose over 1% to 90.40 per dollar in early trade.
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The 18% tariff imposed on India is lower than its Asian peers and comes at the right time as exporters are still negotiating annual contracts with their US customers, the official said.
Among Asian countries, US tariffs on goods from Indonesia stand at 19% and 20% for Vietnam and Bangladesh.
“Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into the US supply chain,” said SC Ralhan, president of the Federation of Indian Export Organizations.
A reduction in US tariffs on most Indian goods will revive India’s exports to the US, Moody’s Ratings said in a statement on Tuesday.
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