A Parliamentary Standing Committee on Commerce is pushing for the swift conclusion of the India-US Bilateral Trade Agreement, advocating for crucial tariff exemptions on key Indian exports and mechanisms to resolve trade frictions, aiming for a more balanced and mutually beneficial economic partnership.
Key Points
- The Parliamentary Standing Committee on Commerce has urged the government to conclude the India-US Bilateral Trade Agreement (BTA) promptly, ensuring India's interests are protected.
- The committee recommended negotiating 'complete exemption' for key Indian export products, including generic medicines, critical minerals, and smartphones, from future US tariff increases.
- It proposed establishing a fast-acting watch desk for US Customs audits and fast-tracking Mutual Recognition Agreements to address non-tariff barriers and prevent trade disputes.
- The panel called for leveraging 'friend-shoring' trends to integrate Indian manufacturers into critical US supply chains and attract FDI into India's manufacturing sector.
- The committee highlighted that current US tariffs on Indian goods remain elevated at 18 per cent, significantly impacting India's exports and broader economy.
The Parliamentary Standing Committee on Commerce has urged the government to conclude the proposed India-US Bilateral Trade Agreement (BTA) at the earliest while ensuring that India's interests are adequately protected.
"The proposed BTA, without compromising Indian exporters' interest, should be concluded at the earliest, so that businesses in both countries can benefit from a stable and predictable trade environment," the panel said in its report tabled in Parliament.
Key Recommendations for Indian Exports
The committee recommended that India negotiate "complete exemption" for key export products, including generic medicines, critical minerals and smartphones, from any future US tariff increases.
It also proposed that the Directorate General of Foreign Trade establish a special, fast-acting watch desk to track US Customs audits in real time, so that Indian exporters can get instant warnings about any new import rules.
To address non-tariff barriers, the panel asked the government to fast-track Mutual Recognition Agreements for professional services, pharmaceuticals and agricultural standards to prevent arbitrary technical barriers to trade (TBT) at US ports.
Preventing Trade Disputes and Supporting MSMEs
In order to prevent trade disputes from escalating, the committee proposed establishing a dedicated, fast-track bilateral institutional mechanism with US trade authorities to proactively flag, discuss and resolve trade frictions and compliance disputes before they escalate into restrictive tariff actions.
The committee also recommended setting up an institutional mechanism to routinely review currency volatilities and logistics challenges to cushion MSME-led export sectors from sudden regulatory changes.
It said such measures would help build a "stronger, more balanced and mutually beneficial economic partnership" between India and the US.
Services Trade and Supply Chain Integration
Noting the growing importance of services trade, the report said India's services exports to the US stood at $51.2 billion, growing at a compound annual growth rate (CAGR) of 11.58 per cent since 2020, while imports reached $47.32 billion with a CAGR of 18.68 per cent.
Bilateral services trade has more than doubled from $40.53 billion in 2014 to $98.52 billion in 2024.
The committee, however, noted that India's services imports from the US are growing at a much faster rate (18.68 per cent CAGR) than our services exports.
The panel suggested that the government actively leverage global friend-shoring trends to deeply integrate Indian manufacturers into critical US supply chains, particularly in electronics, semiconductors and clean energy.
Alongside this, it called for "targeted investment promotion strategies" to attract US foreign direct investment (FDI) into India's manufacturing sector.
Focus on MSMEs and Tariff Reductions
The committee called for special attention to MSMEs to enable their effective participation in exports and to enhance their resilience to US tariff measures.
It also recommended a "specialised market-linked incentive scheme" to help textile and gems-and-jewellery exporters diversify product designs in line with changing consumer preferences in the US.
The panel also recommended that the BTA negotiations focus on reducing tariffs on engineering goods, auto components and other automotive products.
It said the removal of additional US tariffs would improve India's competitiveness and provide exporters with the necessary predictability to formulate long-term business strategies.
Addressing Existing Tariff Issues
The committee further urged the government to resolve tariff-related issues involving steel, aluminium, copper and chemical products under the BTA.
It asked the government to engage with the US to safeguard domestic industry in relation to Section 232 tariffs and Section 301 investigations, and to secure "long-term, barrier-free access" to US aluminium and copper scrap to avoid disruptions in raw material supplies for downstream industries.
The report noted that exporters continue to face uncertainty due to volatile exchange rates, commodity prices and higher US tariffs.
It observed that the US tariff on Indian goods, though reduced from the peak a few months ago, still stands at 18 per cent compared with the earlier rate of 3 per cent, holding that the elevated tariff regime continues to affect India's exports and the broader economy.
‘Reports on ethanol import from US baseless’
The commerce and industry ministry on Thursday said claims in the media suggesting that India intends to import large quantities of ethanol from the US for fuel blending are “baseless and factually incorrect”.
“As per the domestic policy framework, ethanol used for fuel blending under the Ethanol Blended with Petrol Programme is sourced entirely from domestic producers.
"There is no import of ethanol for fuel blending from the US.
"Further, no concessions or commitments relating to the import of ethanol for fuel blending from the US have been made in the India-US trade discussions,” the ministry said, adding that India’s fuel blending programme and ethanol procurement continue to be governed solely by India’s domestic policy requirements.
