India and the United States are “very close” to finalising a bilateral trade agreement, Union Commerce and Industry Minister Piyush Goyal said on Thursday, reported news agency Reuters.
However, he made it clear that only after it secures a competitive advantage over its trading rivals.
Speaking in London, Goyal said negotiations have largely been completed and both sides have been working on the finer details since February 6. The remaining discussions are centred on ensuring India receives favourable tariff treatment compared to competing countries.
“The day the US finds appropriate tools to give us a competitive advantage, the deal is on,” Goyal said.
He added that discussions are underway on how the United States can provide India with the necessary legal framework and mechanisms to ensure Indian exports remain more competitive than those from rival nations.
“We cannot enter a deal with the US until the framework of having a comparative advantage is finalised,” the minister said.
According to Goyal, India wants to ensure it continues to enjoy an advantage over its peers under the proposed trade agreement.
The minister indicated that the broad contours of the agreement were finalised months ago.
” on February 6 and teams have been working since then on finer details,” he said.
The delay, he explained, is linked to ensuring that Indian exporters do not lose their edge if similar tariff concessions are extended to competing countries.
Earlier, India had agreed to an 18% tariff rate in discussions with the US, but that understanding was based on India receiving a comparative advantage over its competitors.
“When India agreed to an 18% tariff rate with the US, it was centred around having a comparative advantage,” Goyal said.
In simple terms, India wants its exports to face lower or more favourable tariffs than goods coming from competing countries.
For example, if Indian textiles, engineering goods or pharmaceuticals attract lower import duties in the US than similar products from Vietnam, Bangladesh or other countries, Indian exporters become more competitive in the American market.
This advantage could help Indian companies increase exports, gain market share and create more jobs.
The proposed India-US trade agreement is expected to cover tariffs, rules of origin, investment provisions and greater cooperation across sectors.
It is also expected to deepen economic ties between the world’s largest and fifth-largest economies while opening new opportunities for Indian exporters and businesses.
With Goyal saying the two countries are “very close” to concluding the agreement, attention will now shift to whether both sides can resolve the remaining issues around tariff preferences and competitive access before the deal is formally signed.