The United States is India’s second-largest trading partner after China, which sets up nicely for the next agreement in principle around a possible trade deal with the U.S.
Through last year, total trade between India and the U.S. stood at $127.9 billion, with the U.S. running a $46.8 billion deficit after $40.5 billion in exports and $87.4 billion in imports.
One of the challenges around any negotiations is the idea of strategic autonomy.
Whether it’s security tensions with Pakistan, oil imports from Russia or the U.S. placing tariffs on American service firms that operate in India, getting to a long-term trade agreement does not look to be as achievable as that with the United Kingdom.
India has one of the highest tariff barriers in the global trading system with an average of 17% or 12% on a trade-weighted basis.
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While there is ample room for India to lower those tariffs, it is doubtful that India will give much on its oil imports or any framework that restricts efforts to move up the value chain in the global economy.
India’s commitment to remain non-aligned in its external political, security and economic affairs will continue to cast a shadow over any current framework or future trade agreement.
