The announcement to negotiate a bilateral trade agreement between India and the US has boosted business confidence in both countries, as it can help further strengthen economic ties by leveraging their competitive strengths, Commerce and Industry Minister Piyush Goyal said on Sunday.
During the recent visit of Prime Minister Narendra Modi to Washington, India and the US announced to more than double the two-way commerce to $500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement (BTA) by fall of 2025.
“The Prime Minister has brought back with him an agreement or an understanding to enter into a trade deal by fall of this year. I think, it gives a lot of confidence and a lot of relief to every business person in the US and in India who believe that together, we can truly transform world trade, together with our competitive strengths in different areas, we can truly work as two friends, as two partners for progress and prosperity,” Goyal said.
Normally in a free trade agreement, two trading partners either eliminate or significantly reduce customs duties on the maximum number of goods traded between them. Besides, they also ease norms to promote trade in services and boost investments.
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During the first term of US President Donald Trump, the two countries had discussed a mini-trade deal, but it was shelved by the Joe Biden administration as they were not in favour of such pacts.
The commerce minister also said that India is expanding and forging new partnerships across the world with new trade agreements with the developed world including with Australia, the UAE, and EFTA bloc.
The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.
“The progress we are making in other engagements with Europe, and the progress we will soon make with the US as we proceed to finalize a trade deal by fall of this year, are all reflective of India’s growing relevance at the global stage,” he said at the ET Now Global Business Summit here.
In 2023, the US and India bilateral trade in goods and services stood at $190.08 billion ($123.89 billion goods and $66.19 billion services trade). In that year, India’s merchandise exports to the US stood at $83.77 billion, while imports were $40.12 billion, leaving a trade gap of $43.65 billion in favour of India.
The country’s services export to America was $36.33 billion in 2023, while imports were aggregated at $29.86 billion. The trade gap (difference between imports and exports) was $6.47 billion in favour of New Delhi.
Further, he said that the government is taking a series of steps to boost domestic manufacturing.
“The Make in India story is now going to be led by a National Manufacturing mission, which will come up with newer ideas and address the challenges that manufacturing in India faces (by) MSMEs or otherwise, and ensure that making in India becomes more competitive,” he added.