India may insist on tariff safeguards, market access edge before sealing US trade deal

India is unlikely to be rushed into a trade deal with the US and is expected to prioritise securing safeguards against future unilateral US tariff actions and better market access than competitors such as Bangladesh and Vietnam during US Trade Representative Jamieson Greer’s June 23-24 visit to New Delhi, sources said.

The US, meanwhile, is expected to anchor negotiations around the 18 per cent additional tariff on Indian goods proposed in the interim trade deal framework agreed in February, even though the broader 25 per cent reciprocal tariff regime on which the proposal was based was later struck down by a US court.

“New Delhi may also prefer to wait for greater clarity on the Section 301 proceedings being pursued by the USTR against India, which could themselves face legal challenges, before taking a final call. It would definitely insist on firm commitments on advantage over rivals and a guarantee of no future penal measures,” a source tracking the matter told businessline.

Trade experts argue that India should avoid rushing into an agreement and instead seek a balanced deal that provides long-term stability for industry.

“The proposed trade pact is increasingly neither balanced nor stable. Washington wants India to make permanent commitments on market access for agriculture, energy, defence equipment, aircraft, digital services and advanced technologies, and purchases of up to $500 billion of American goods over five years, limiting digital regulations and aligning more closely with US economic and security objectives,” said Ajay Srivastava of GTRI.

In return, the principal US concession was a reduction in reciprocal tariffs from 25 per cent to 18 per cent, he said, adding that the offer lost its legal basis after the court ruling against the reciprocal tariff regime.

According to Srivastava, Washington is now seeking to regain the same bargaining leverage through Section 301 tariffs. For India, this could mean tariffs under the two ongoing Section 301 investigations, would be capped at 18 per cent if New Delhi signs the pact. 

“What’s the hurry? Section 301 tariffs, too, could face legal challenges. India must see how the situation evolves,” said Biswajit Dhar, former professor at JNU. India has maintained in USTR hearings that it does not use goods made through forced labour, and accepting tariffs on such grounds could set an adverse precedent for future free trade agreements, he argued.

Whenever India finalises a trade pact with the US, it should contain clear assurances that Washington will not subsequently use unilateral measures such as Section 301 actions to impose tariffs on Indian goods or seek policy changes in areas such as intellectual property rights, Dhar added.

Pointers: India wants trade deal to provide better US market access than rivals like Bangladesh, Vietnam.

US may use 18 per cent tariff proposed in February framework as negotiating benchmark.

New Delhi likely to await clarity on USTR’s Section 301 probes before finalising