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India has got a big relief from the new trade agreement between India and America. US President Donald Trump has announced that the tariff imposed on Indian goods in America has been reduced from 50 percent to 18 percent. This will reduce the long standing trade tension between the two countries.
How did the tariff go from 50% to 18%?
Earlier, America used to impose total duty of 50 percent on India. This included a 25% reciprocal tariff and a 25% additional tariff that was imposed on India’s purchases of Russian oil. Now under the new agreement, America has removed the additional 25 percent tax related to Russian oil. Now only the revised reciprocal tariff will be applicable, bringing the total rate to 18 percent.
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India’s position compared to other countries
After the new tariff rate, India has got a clear edge over regional and global competitors.
How much tariff on India’s neighboring countries?
Bangladesh: 20%
Vietnam: 20%
Malaysia: 19%
Cambodia: 19%
Thailand: 19%
Pakistan: 19%
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high tariff countries
China: 34%
Brazil: 50%
South Africa: 30%
Myanmar: 40%
Laos: 40%
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Major countries with lower tariffs than India
European Union: 15%
Japan: 15%
South Korea: 15%
Switzerland: 15%
United Kingdom: 10%
Trump’s claim and India’s stance
US President Trump said on the social media platform ‘Truth Social’ that the talks with India were respectable. He claimed that Indian Prime Minister Narendra Modi has agreed to reduce purchases of Russian oil and increase oil purchases from the US (and possibly Venezuela). Trump says this will help end the Russia-Ukraine war. According to media reports, India has reduced oil imports from Russia in recent months and in January it stood at around 12 lakh barrels per day.
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Many things are still not clear in the agreement
However, despite the big announcement, many details of the agreement have not been revealed yet. Like when will the new tariff come into effect? Which American products will India increase its purchase of? And how will trade barriers be reduced? Detailed information on these questions is yet to come from both the countries.
Big deal with European Union also
This agreement has come at a time when India has recently signed a major trade agreement with the European Union, in which it has been said to reduce or eliminate tariffs on more than 96 percent of the goods, although some agricultural products are not included in it. Overall, the new deal with America is expected to give India a boost in exports, encouragement to industries and a stronger position in the global market.
