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Informist, Thursday, Aug. 7, 202

 

--Govt source: US trade official Lynch to visit India Aug 25-29 for talks

 

By Krity Ambey

 

NEW DELHI – Assistant US Trade Representative Brendan Lynch will lead a delegation of officials to India for five-day-long trade deal negotiations starting Aug. 25, a commerce ministry official said. This sixth round of negotiations will begin just two days before the US' extra 25% duty on Indian goods--over and above the 25% reciprocal tariff--is set to take effect. 

 

The two sides have held five rounds of negotiations for the Bilateral Trade Agreement between March and July. The fate of nearly 20% of India's exports hinges upon the upcoming round of negotiations in August. 

 

Indian exporters see the trade deal as a cushion against US President Donald Trump's proposal of extra tariffs. But the deal is still away from conclusion. The White House will start collecting 25% reciprocal duty on Indian goods from Thursday, unless Trump announces another pause/deferment on reciprocal tariffs, as he had done in April. 

 

Prime Minister Narendra Modi and Trump, while initiating the Bilateral Trade Agreement in February, had set a timeline of fall 2025 for the conclusion of the first tranche of the deal. A conclusion by October may help mitigate the risks to the Indian economy due to the extra tariffs. But New Delhi and Washington are yet to iron out differences over the farm sector in their negotiations.

 

The US wants access to India's farm sector under the trade deal. India, on other hand, has always maintained a protective stance on the sector. The US also wants to push its genetically-modified crops and dairy products into India under the deal. But India is not willing to yield to these demand, as this may compromise on the interests of Indian farmers and dairy farmers. 

 

The extra tariffs announced by India's top export destination could cap India's merchandise exports below $400 billion in 2025-26 (Apr-Mar), for the first time in four years. Experts estimate risk to 55% of India's shipments to the US, leading to a more than 30% fall in exports to the US. India had exported $86.5 billion of goods to the US in FY25 and had a trade surplus of $40.82 billion. 

 

The hit to India's exports from an extra 50% tariff in the US could pose a downside risk of 60 basis points to GDP growth, according to Goldman Sachs. "We see downside risks to our growth estimates for both 2025 and 2026, but are not making any changes to our growth forecasts at the moment, given that there is a three-week window for negotiations until the new incremental tariffs come into effect," Goldman Sachs said in its report. 

 

The finance ministry expects India's economy to grow in the range of 6.3-6.8% in the current year, while the Reserve Bank of India has estimated a GDP growth of 6.5% for FY26. But the hit to the Indian economy due to the US tariffs could also limit GDP growth below 6%, for the first time in four years.  End

 

US$1 = INR 87.73

 

Edited by Akul Nishant Akhoury

 

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