US and India Poised for Landmark Trade Deal Amid US-China Tensions

The US is considering a comprehensive trade agreement with India as part of its strategy to diversify supply chains away from China. The potential deal aims to strengthen economic ties, reduce tariff barriers, and address key negotiation points while enhancing bilateral trade relations amidst ongoing geopolitical shifts.

The United States is inching closer to a landmark trade agreement with India, as Washington intensifies efforts to diversify critical supply chains away from China. This shift comes amid escalating trade tensions with Beijing, which has tightened its control over rare-earth exports, prompting US policymakers to seek reliable partners such as India, according to the Global Trade Research Initiative (GTRI).

The think tank suggests that this shift could expedite a trade deal, potentially offering India a 16-18% tariff access—higher than the EU and Japan but still below the rate for Vietnam. GTRI highlights the urgency from Washington to secure an accord that minimizes reliance on China, thereby bolstering economic cooperation with India. The deal proposes to ease the current 50% tariffs impacting Indian exports to the US.

Despite the optimism, GTRI urges India to protect its core interests during the negotiations. Key issues such as data localization, digital trade, and intellectual property rights could prove contentious. Meanwhile, the US will likely push for greater market access in medical devices, dairy, and technology sectors. As the US prioritizes supply chain security, India's expanding market and manufacturing capacity make it an ideal partner.

Amid these developments, currency markets have shown optimism, with the Indian rupee experiencing significant fluctuations. The Reserve Bank of India appears to be mitigating volatility ahead of Diwali, anticipating a surge in dollar inflows should a trade agreement materialize. Such a pact would not only fortify bilateral economic relations but also reduce dependencies on China-linked supply networks, signaling a significant pivot in US-India trade dynamics. (ANI)

(With inputs from agencies.)