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Home»Business»Trade ministry begins expanding NAFTA wing as India seeks quick US tariff truce | Business News
Business

Trade ministry begins expanding NAFTA wing as India seeks quick US tariff truce | Business News

April 7, 2025No Comments5 Mins Read
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In a bid to strike an early commerce cope with the US and doubtlessly sidestep the 26 per cent reciprocal tariffs, the Ministry of Commerce and Trade has stepped up efforts by increasing its NAFTA division, which handles India’s bilateral commerce with the US, Canada, and Mexico, The Indian Specific has learnt.

The ministry has begun assigning new officers to strengthen the NAFTA (North American Free Commerce Settlement) division as extra coordination officers would assist the division handle the workload higher. Senior officers nearing the top of their time period within the ministry may additionally see their tenures prolonged, two authorities officers conscious of the event stated.

A swift cope with the US is essential for Indian exports, as a number of international locations hit with excessive reciprocal tariffs—akin to Vietnam and Cambodia—have signalled to the US their willingness to slash tariffs on American items underneath a commerce settlement. The US can also be in talks with a number of different international locations which have expressed curiosity in such offers.

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Indian rivals for US deal

“Simply had a really productive name with To Lam, Common Secretary of the Communist Social gathering of Vietnam, who instructed me that Vietnam desires to chop their tariffs all the way down to ZERO if they’re able to make an settlement with the US. I thanked him on behalf of our nation, and stated I stay up for a gathering within the close to future,” US President Donald Trump stated in a social media publish.

Vietnam, going through 46 per cent US reciprocal tariffs, has additionally requested a delay of at the least 45 days within the imposition of those duties to permit time for negotiations that would forestall a transfer detrimental to each the Vietnamese economic system and American shoppers. Vietnam’s tariffs on US items stand at 9.4 per cent—decrease than India’s tariffs on US imports.

In the meantime, Cambodian Prime Minister Hun Manet has sought negotiations after the US authorities imposed a 49 per cent tariff on merchandise from Cambodia. In keeping with Chinese language information company Xinhua, Manet acknowledged that Cambodia is dedicated to selling US-based product imports, with a right away discount of tariffs on 19 product classes from a most certain price of 35 per cent to a 5 per cent utilized tariff price.

India but to signal a full-fledged cope with Western associate

Nonetheless, India is but to signal a full-fledged commerce cope with any Western nation as a result of important variations over labour and environmental requirements. India’s commerce agreements with the European Union and the UK have been underneath negotiation for a number of years.

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Commerce Secretary Sunil Barthwal at an trade occasion in March acknowledged that companies typically lose curiosity in commerce offers if negotiations proceed for too lengthy. He urged India’s commerce companions to concentrate on core points and contemplate starting with a restricted settlement driving dwelling tangible outcomes.

Selective concessions for international locations will damage India

An auto part producer had instructed The Indian Specific earlier this month that Indian exporters are usually not involved if tariffs apply on all international locations however “selective concessions” would have an effect on India’s competitiveness.

“The White Home stated the tariff would apply not solely to totally assembled automobiles but additionally to key vehicle elements, together with engines, transmissions, powertrain elements, and electrical parts. That listing might broaden over time to embody further elements. As of now, engine parts, powertrains, and transmissions are India’s largest auto part exports. From a aggressive place, issues stay the identical. The issue can be if there are selective relaxations, if US demand slumps as items develop into dearer, or if China undercuts via opaque subsidies,” the supply stated.

Making a case for quicker negotiations with the US, Rudra Kumar Pandey, Associate at Shardul Amarchand Mangaldas & Co, stated that US reciprocal tariffs might have a right away dampening impact on demand as a result of elevated landed prices. Nonetheless, India’s comparatively decrease tariff price—towards Vietnam’s 46 per cent and China’s 34 per cent—creates a window of alternative to spice up its relative competitiveness within the US market.

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“This differential might function a catalyst for the realignment of worldwide provide chains, notably for US corporations seeking to scale back dependence on China and diversify away from higher-tariff markets. India is uniquely positioned to learn from this shift, particularly in electronics and textiles, the place it enjoys not solely a tariff benefit but additionally a big and expert labour drive, quickly increasing industrial infrastructure, and over $24 billion in incentives dedicated underneath Manufacturing Linked Incentive (PLI) schemes,” Pandey stated.

US deal will not be simple

Indicating that the US would seemingly press India on a spread of points throughout commerce talks, a report by the US Commerce Consultant (USTR) expressed issues about knowledge localisation necessities for cost service suppliers and banks. The USTR report additionally acknowledged that the US has positioned India on the ‘Precedence Watch Record’ as a result of inconsistent progress on mental property (IP) points. It cited the absence of particular legal guidelines for “commerce secret safety” and lengthy ready intervals for patent approvals as main issues.

Moreover, the US has raised issues over India’s value caps on coronary stents and knee implants, arguing that these controls haven’t stored tempo with inflation and don’t contemplate manufacturing prices or innovation, doubtlessly discouraging US corporations from working within the Indian market.



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