The landmark trade agreement between India and the US became public on February 2, setting new tariff rates that resolve long-standing trade disputes between the two countries. The United States will lower its tariffs on Indian imports to 18 per cent under the treaty, down from previous rates that hit 50 per cent last year.
The new law is also expected to have various impacts on product prices, affecting customers and businesses in both regions.
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'Deal unlocks opportunities'
Reacting to the India-US trade deal, Sunil Bharti Mittal, Founder & Chairman, Bharti Enterprises said that it has unlocked a mammoth of opportunities in terms of investment and growth. "The India–US trade deal is a much awaited and a significant milestone for both the nations, unlocking immense opportunities for investments, growth," he said.
"The flurry of FTA's is an affirmation of India’s role at the centre of global frameworks, aimed at building resilient international trade patterns," he added.
What will get cheaper?
The rollback of tariff will lead to a decrease in prices for many product categories:
Agricultural goods: Because of lowered import tariffs, the prices of agricultural goods such as foodstuffs, ranging from grains and vegetables to dairy and processed foods will go down.
Technology and electronics: There will be overall lower prices for laptops and gadgets, as well as electronic components due to lower costs for importing technologies.
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Consumer goods: Overall consumer goods prices such as the price of processed food, pre-packaged goods, household appliances and plastic will lower due to lower tariffs.
Medical and industrial equipment: Tariff reductions will positively impact the cost of medical devices, pharmaceuticals, defence equipment machinery and aircraft parts.
Oil and petroleum products: New trade agreements are going to change the overall cost of energy sources, as India will increase its buying of US crude oil and liquefied natural gas products.
Luxury goods: Items like premium American spirits (like Bourbon whiskey), Harley-Davidson motorcycles and high-end apparel that previously faced highest tariffs are now slated for removal or drastic reduction.
What will get costly?
Many products will remain expensive due to high duties that still exist and ongoing US trade restrictions, even after tariffs go down.
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Steel, aluminium and copper: The US Section 232 tariffs that currently exist on these metals steel, aluminum and copper (including the increasing tariffs) provide protection for their prices through high tariff rates so that the market prices will not fall significantly.
Auto parts: The current tariff rates on certain types of auto parts will continue to remain high, as is the current case, so their prices will remain unchanged.
The tariff rollback is expected to increase Indian exports to the US. It will support sectors like gems and jewelry, textiles, engineering goods and pharmaceuticals. This change should also improve market sentiment and trade flows between the two nations.
