India greets Trump trade deal announcement with joy, caution

The US president said that the agreement was achieved after India’s Prime Minister Narendra Modi promised to halt Russian oil purchases and lower trade barriers on US exports. (EPA Images pic)MUMBAI: Indian exporters on Tuesday hailed Donald Trump’s announcement of a US-India trade deal and a pledge to slash tariffs on the nation’s goods that brings an end to months of uncertainty but analysts urged caution citing a lack of clarity.The US president said that the agreement came together after Prime Minister Narendra Modi promised to stop buying Russian oil over the war in Ukraine, adding that he would lower levies to 18 percent from the 25 percent imposed last year.He also said New Delhi had agreed to purchase more than US$500 billion worth of US energy, technology, agricultural, coal and other goods. An extra 25 percent toll imposed over India’s Russian oil purchases was also removed, a White House official told AFP.While Washington had struck deals with most governments since he unveiled sweeping tariffs in April last year, Indian officials had struggled to follow suit.The lack of a pact had rattled investors for much of last year and prompted foreign funds to pull more than US$20 billion from Indian markets, while hammering the rupee.But the president’s announcement late Monday was welcomed by markets, with Mumbai’s benchmark Nifty index jumping nearly five percent at the open.The Federation of Indian Export Organisations called the agreement the “father of all deals”, adding that several sectors would see a “rapid surge in orders”.“It is extremely good news,” FIEO director general Ajay Sahai told AFP. “Indian exporters will now be equally competitive compared to Southeast Asian and South Asian rivals. If you look at a lot of our rivals in the region, it is mostly above 19 percent.”Sahai said apparel and footwear manufacturers, who had seen orders delayed because of the high US duties, would feel immediate relief.“Normally orders for the upcoming (summer) season are finalised by December. But a number of orders were put on hold due to the tariffs. Now that will start moving back to India.”Despite resilient shipments of smartphones and generic drugs — which were exempted from the original tolls — labour‑intensive sectors such as marine products and gems and jewellery had been hit hard.G. Pawan Kumar of the Seafood Exporters Association of India estimated Trump’s earlier 50 percent tariff had led to a 15 percent year‑on‑year drop in export volumes to the United States between April and November.“We are confident that with the conclusion of the trade deal and lowering of tariffs to 18 percent, the quantum of export of seafood from India to USA will show an increase and soon reach back to the previous levels,” Kumar said in a statement.But analysts pointed to the lack of clarity on several aspects of the deal — including Trump’s claim that India would “move forward” to cut its tariffs on US goods to “zero”.Negotiations had repeatedly stumbled over India’s refusal to expose its politically sensitive agriculture sector to greater US access.“We will gain from this deal. But I’m actually worried that there is a bigger picture and that is not very clear,” economist Biswajit Dhar told AFP.He added that the commitment from the Indian government was that it would not open up agriculture, but Trump’s post “gave initial indications that the US was getting access to agriculture”.Others sought more clarity on the timeline for Trump’s claims that New Delhi would ramp up purchases of US energy and tech.“The headline figure of US$500 billion in purchases is unclear,” said Ajay Srivastava of the Global Trade Research Initiative, a Delhi-based thinktank, in a note.“India currently imports less than US$50 billion a year from the US. This looks more like an aspiration than a commitment. Until there is a joint statement, negotiated text and clarity on enforcement, this should be seen as a political signal — not a final deal.“Caution, not celebration, is needed.”

MatchPoint Times

India greets Trump trade deal announcement with joy, caution

US President Donald Trump’s announcement on the trade deal was welcomed by markets, with Mumbai’s benchmark Nifty index jumping nearly five percent at the open.

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