In New Delhi, on March 16, a senior government official stated that the interim trade agreement between India and the US will be signed once the new global tariff structure of the United States is in place.
"Ultimately, each country will be negotiating a deal as part of a package, where one country has a comparative advantage," the official said.
India and the US had announced the finalization of a framework for the first phase of the bilateral trade agreement last month. According to this framework, the US had agreed to reduce tariffs on India to 18 percent.
However, the US's tariff structure has changed following its Supreme Court ruling against President Donald Trump's sweeping tariffs. Subsequently, the US President imposed 10 percent tariffs on all countries for 150 days from February 24.
Given these changes, the meeting of the chief negotiators of India and the US has been postponed. They were scheduled to meet last month to finalize the legal text of the agreement, which was expected to be signed this month.
"The deal was to be signed in March. However, when we said this, the Supreme Court judgment on IEEPA (International Emergency Economic Powers Act) tariffs had not yet been issued. Now, with the Supreme Court judgment on IEEPA tariffs, the tariffs themselves do not exist," the official said.
"Now, there are tariffs under Article 122, which relates to the balance of payments crisis, and they are for five months, at around 10 percent. Therefore, the deal that we finalize and sign must be aligned with this tariff structure or the comparative advantage that India gains in the US market," the official added.
The official further stated that the US is working to recreate a global tariff architecture.
"Once they are on that path, they will be able to create that. I think at that point, it would be appropriate to sign the deal," the official said.
The official said that the agreement has already been finalized and agreed upon, and both teams are negotiating to finalize the finer details.
"But the actual signing will happen when the new global tariff structure is in place," the official added.
Regarding the 18 percent tariffs on India, the official stated that these are subject to how the situation unfolds and how the global architecture develops.
"If the global architecture is exactly the same as the IEEPA tariffs, it may remain the same. If it is different, it may also change. Therefore, we will have to wait and see how it goes," another official said.
When India finalized the deal, it had a comparative advantage compared to its competitor countries.
"Therefore, whenever we are ready, the US side is also ready with that framework, and I think that will be the opportune time to sign it," the official said, adding, "There is nothing that there is a standoff. There is nothing that the deal is not there."
The trade deal is about access to markets for each other, with a 18 percent tariff on India being the lowest among its competitors, including China, Vietnam, and Thailand.
"If other countries have tariffs of 19 or 20 or 21 or 22 percent, then India may remain at 18 percent. But if others reduce their tariffs, then India will also reduce its tariffs. Therefore, it will depend on how the new architecture develops. And that is something for the US to decide," the official said, adding that as of now, the deal is at 18 percent.
Meanwhile, reports indicate that Malaysia has stated that it will not proceed with its trade deal with the US.
Two sets of countries have finalized agreements with America – one that has announced the framework deal but has not yet signed the legal agreement, and the other that has not signed the legal pact.
When asked about the two investigations initiated by the US under Section 301, the official said that the ministry is examining its legal implications.
"These investigations take time. My assessment is that whenever a (trade) deal is finalized and signed in the future, this will take care of these investigations," the official added.
On March 12, the United States Trade Representative (USTR) launched a Section 301 probe, covering 60 economies, including India and China.
The investigations will determine whether the acts, policies, and practices of each of these economies related to the failure to impose and effectively enforce a ban on the importation of goods produced with forced labor are unreasonable or discriminatory, and whether they burden or restrict US commerce.
On March 11, the USTR launched a Section 301 trade investigation targeting the policies and industrial practices of 16 economies, including India and China.
Regarding the trade deal, Commerce Secretary Rajesh Agarwal said, "India remains engaged with the US side for a mutually beneficial trade agreement."
India is discussing details with the US, as there are many elements of the deal.
"There are certain non-tariff barriers that need to be addressed. There are also certain other details related to the 232 tariffs that need to be worked out. Therefore, I think we are using this time constructively to ensure that we can address these issues so that they can be resolved when the time is right for signing the deal," the official said.