India Urged to Steer Clear of U.S. Comprehensive FTA Amid Trade Talks

Global Trade Research Initiative advises India to avoid a comprehensive free trade agreement with the U.S., citing potential harmful trade-offs. Instead, a limited 'Zero-to-Zero' tariff deal on industrial goods is recommended. The report highlights possible adverse consequences on key Indian sectors if a full FTA is pursued.

As the U.S. announces a temporary suspension on tariffs to facilitate trade negotiations, the Global Trade Research Initiative (GTRI) has advised India against entering a comprehensive Free Trade Agreement (FTA) with the United States. The think tank warns that such a deal may compel India to accept deleterious concessions affecting major sectors.

GTRI suggests instead that India should consider a 'Zero-to-Zero' tariff agreement covering 90 percent of industrial goods, following a model proposed by Europe to the U.S. This strategy, GTRI argues, would minimize risks and prevent India from making damaging trade-offs in crucial areas.

The report identifies specific U.S. demands that could undermine India's economic fabric, such as weakening the minimum support price system for Indian farmers, allowing genetically modified food imports, and altering patent laws to extend drug monopolies. Additionally, reduced agricultural tariffs and concessions to e-commerce giants could adversely affect Indian agriculture, public health, and small businesses.

Drawing parallels with the collapse of Australia's automotive industry post-tariff cuts, the report cautions against reducing duties on automobiles that could jeopardize India's significant auto sector. It criticizes past Indian trade concessions to the U.S., deemed inconsequential and disrespectfully dismissed by former President Donald Trump.

The report advises India to enhance trade relations with the European Union, United Kingdom, and Canada, while expanding partnerships with China and Russia. Strengthened ties with Japan, South Korea, and ASEAN countries are also recommended. Highlighting the potential for joint value chains with China, the report emphasizes mutual benefits in the chemicals, machinery, and electronics sectors through collaborative use of raw materials and parts.

(With inputs from agencies.)