New Delhi, February 7: The interim framework of the India-US trade agreement has been unveiled, revealing that India has secured a more advantageous deal compared to other nations, including its neighbors.
This trade agreement is set to enhance economic cooperation between India and the United States. It will also open a significant market worth $30 trillion for the country’s MSMEs, small businesses, and skilled workers.
Under the India-US trade agreement, tariffs on Indian exports to the US have been reduced from 50% to less than 18%. This reduction will bolster India’s competitive edge in the American market.
With an 18% tariff, India will be better positioned to compete against its strong allies in the US market, effectively narrowing the tariff gap. Currently, the US imposes tariffs of 15% on Europe, 10% on the UK, and 15% on Switzerland, Japan, and South Korea.
Brazil tops the list of countries facing the highest tariffs from the US at 50%, followed by Myanmar and Laos at 40%, China at 37%, and South Africa at 30%.
The trade agreement with the US is expected to significantly benefit India’s textile, apparel, leather goods, and chemical and engineering goods industries. This will strengthen India’s position compared to regional competitors in terms of cost. The framework also paves the way for tariff eliminations on a wide range of Indian goods.
Moreover, the reduction in US tariffs will place India in a favorable position compared to most ASEAN countries and enhance its competitiveness against China.
Radhika Rao, a senior economist at DBS Group Research, stated, “This success is clearly positive for the real economy, exports, market sentiments, and financial markets, although we await further details.”
India now ranks among the countries with the lowest tariff rates compared to other Asian economies such as China, Pakistan, Indonesia, Bangladesh, and Vietnam, following the tariff rates imposed by the Trump administration.
