A new round of talks has started in New Delhi from Tuesday (June 2) towards finalizing the much-awaited bilateral trade agreement (BTA) between India and America. Although issues like market access, tariff reduction and investment remain important, this time the most important sticking point in the talks has emerged as “Section 301” of the US Trade Act.
India’s concern is that if Indian products get the benefit of lower duties under the trade agreement today, but in the future the US imposes new tariffs under Section 301, then the benefits of the agreement could be largely lost. This is why Indian negotiators are seeking assurance of tariff stability and security before finalizing this agreement.
Commerce Minister Piyush Goyal has already indicated that about 99 percent of the discussions on the trade agreement between India and the US have been completed. In such a situation, the current talks are being considered decisive.
What is America’s Section 301?
Section 301 is a key provision of the US Trade Act of 1974, which gives the Office of the US Trade Representative (USTR) the authority to investigate countries that are accused of allegedly adopting unfair trade policies against American businesses.
If the allegations are found true in the investigation, the US may impose additional import duties, trade sanctions or other punitive measures on the country concerned. This provision can be invoked on issues such as infringement of intellectual property rights, obstruction to market access, government subsidies, labor rights issues and forced technology transfer.
According to experts, the biggest strength of Section 301 is that the US can take unilateral action under it without waiting for a long legal process like the World Trade Organization (WTO).
Why does India want security?
India’s concern is more about the uncertainty of the future than the current investigation. After the US Supreme Court repealed President Donald Trump’s Reciprocal Tariffs, the US administration has started investigation against many countries including India under Section 301.
Indian officials fear that if additional duties are imposed on Indian exports in the future based on this investigation, the benefits of the proposed trade agreement could be diluted. According to an Indian trade official, “India will have to discuss tariff rates, the impact of the Section 301 investigation and a competitive duty structure.” India wants the agreement to include provisions that protect Indian exporters from potential US tariffs under Section 301 in the future.
What will be the impact on Indian exporters?
America is one of India’s largest and important export markets. India exports medicines, engineering products, textiles, chemicals, gems and jewelery and technical services to the US. If additional duties are imposed, Indian products may become costlier and their position in global competition may weaken.
This is why India is demanding not just duty cuts but also long-term trade stability.
Competition is not only from America, but also from Asian countries
An important aspect of the talks is that India is negotiating keeping in mind not only America but also its regional competitors. India wants to get better or at least competitive tariff benefits compared to Bangladesh, Pakistan, Sri Lanka and other manufacturing hubs in South-East Asia.
Experts believe that if India gets competitive duty rates, global companies may prefer India to expand their supply chains. This will provide huge benefits to the country’s manufacturing sector and employment generation.
Which areas is America eyeing?
The US investigation covers textiles and apparel, automobiles and auto parts, steel, petrochemicals, chemicals, construction materials and some healthcare products. America claims that production capacity in these areas has been increased more than demand and they have government support.
However, India has rejected these allegations and said that sufficient grounds have not been presented to initiate an investigation.
eyes fixed on agreement
According to sources, if the interim trade agreement is successfully concluded, the US may refrain from imposing additional duties on Indian products even as the Section 301 investigation continues. This will provide long-term certainty to Indian exporters and investors.
Analysts believe that the ongoing talks in New Delhi are not limited to just trade agreements, but are also linked to India’s strategy to become a global manufacturing and export power. In such a situation, the impact of any consensus on Section 301 can decide the direction of India-US trade relations in the coming years.
Also read:
Assam: Love Jihad accused Asif dies in police encounter; Shot was fired at the team that had gone to recover the murder weapon.
Earthquake of 4.6 magnitude in Bay of Bengal, tremors recorded at a depth of 10 kilometers
Salman Khan’s team sent legal notice to the film ‘Black Deer’
Comments are closed.