The recent agreement to seal a bilateral trade agreement with the United States (US) has given "confidence and a lot of relief" to businesses, as both sides will be able to work together with each other’s competitive strengths, commerce and industry minister Piyush Goyal said on Sunday. “What the Prime Minister has brought back with him is an agreement, or an understanding, to enter into a trade deal by fall of this year, I think, gives a lot of confidence and a lot of relief to every businessperson in the United States and India who believe that together, we can truly transform world trade with our competitive strengths in different areas,” Goyal said at the ET Now Business Global Summit. Prime Minister Narendra Modi and US President Donald Trump on Thursday agreed to begin negotiations and finalise a "mutually beneficial" bilateral trade agreement (BTA) within the next seven to eight months. Both countries will hold talks to increase market access, reduce tariff and non-tariff barriers, and deepen supply chain integration. The proposed trade deal will align with the "bold new goal" set by Modi and Trump to more than double bilateral trade to $500 billion by 2030. These announcements were made after Modi’s first bilateral meeting with Trump since the latter took charge as President of the US on January 20.
The decision to forge a trade deal is a crucial development, considering that the US is India’s largest trade partner and a key strategic partner. Besides, over the next few months, Trump is set to roll out a plan to impose "reciprocal" tariffs on US trading partners to narrow its "large and persistent" annual trade deficit in goods and tackle other "unfair and unbalanced aspects" of trade.
However, even as Trump and Modi have announced their intention to seal a bilateral trade agreement, the US President has made it clear that Washington will not spare India from reciprocal tariffs. Goyal further said that India has been able to ensure a successful future for its international trade by forging new partnerships across the globe, along with new free trade agreements (FTAs) with developed countries such as Australia, United Arab Emirates (UAE), Switzerland, Iceland, Norway, and Liechtenstein.
“The progress we are making in other engagements with Europe, and the progress we will soon make with the United States as we proceed to finalise a trade deal by fall of this year, are all reflective of India's growing relevance on the global stage,” Goyal said. These developments came at a time when the world is struggling with significant trade disturbances, he said, adding that Prime Minister Narendra Modi was the first leader of a large economy to be invited to the White House.
Source: Business Standard
India’s Minister of State for Textiles and Foreign Affairs Pabitra Margherita inaugurated the much-anticipated SILKTECH 2025 today at Bharat Mandapam, New Delhi. The event, part of Bharat Tex 2025, saw distinguished figures including Neelam Shami Rao, IAS, secretary, Ministry of Textiles, alongside other key stakeholders in the silk industry. Organised by the Central Silk Board and its research institutes, the conference aims to spotlight emerging technologies in the silk sector. Emphasising a zero-waste approach, Margherita highlighted the potential for tripling textile production and exports by leveraging quality research and international collaborations. The event also saw the release of two souvenir cum books of abstracts on emerging technologies in the silk sector, enriching discussions with vital knowledge and insights. During the conference, six Memorandums of Understanding (MoUs) were signed between the R&D Institute of Central Silk Board and various research organisations and NGOs, marking a significant step towards enhancing India's silk production capabilities, the Ministry of Textiles said in a press release. Neelam Shami Rao addressed the transformative impacts of the Silk Samagra initiative on sericulture, advocating for the integration of silk by-products into mainstream applications through next-generation technologies. The conference also delved into novel applications of silk beyond textiles, including its potential uses in cosmetics and pharmaceuticals. This aligns with the global trend towards sustainable innovation, reinforcing India’s commitment to becoming self-reliant in silk production. Present at the event were Prajakta L Verma, IAS, joint secretary (fibres), Ajay Gupta, joint secretary, Ministry of Textiles, and P Sivakumar, member secretary, Central Silk Board, who collectively highlighted the event's success in fostering advancements in the silk industry.
Source: Fibre2fashion
Synopsis Finance Minister Nirmala Sitharaman stated that India will regularly review customs and anti-dumping duties to create an investor-friendly environment. The country aims to rationalise trade tariffs. Discussions with the US on reciprocal tariffs and a bilateral trade agreement are ongoing. The government is also considering raising the deposit insurance limit beyond Rs 5 lakh. Reciprocal import duty cuts are a continuous thing and India will periodically review custom duties and anti-dumping duties as its in line with the country's ambition to be an investor friendly country, finance minister Nirmala Sitharaman said in a post budget interaction in Mumbai. Sitharaman was answering a question on the impact of tariff wars on India and domestic inflation. The minister said nation has been monitored regularly both on the supply side and also from the Reserve Bank on the monetary side. “Inflation related management of supplies and monetary policy is working in sync in order to favour the growth cycle,” Sitharaman said. India is continuously reviewing its trade tariffs with an intent to rationalise it, the minister said. “For the last two years India has taken several measures in terms of rationalisation of basic customs duty and their applications, safe guard duties or any anti-dumping duties that we levy are also periodically reviewed. We are building to be an investor friendly country and as a result the duty cuts and the rationalisation we have announced is a continuing process and we will keep doing that,” Sitharaman said. Finance secretary Tuhin Kanti Pandey said reciprocity between the India and US is still only an intent and what form it will take will be known only after negotiations. Pandey pointed to the joint statement issued by the Indian and US governments during prime minister Narendra Modi’s visit to Washington last week. The statement mentioned that both countries will negotiate the first tranche of a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) by fall (before winter) of 2025. President Trump and PM Modi have committed to designate senior representatives to advance these negotiations to deepen bilateral trade, increase market access, reducing tariff and non-tariff barriers, and deepen supply chain integration. Pandey said reciprocal tariff is still only an intent and how and what form it will take is not known yet. “We had already done a lot of rationalisation. For example, in industrial goods, we have about 8000 tariff lines and 6000 of those are below 10%. Tariffs for the thirty most important imports from US into India are between 0% to 2.5%. Very few items are at a higher duty, so also textile and apparel exported to the US from India. Those are the issues which will be sorted out while negotiating the trade agreement,” Pandey said. Modi and Trump in their joint statement had resolved to deepen the U.S.- India trade relationship setting a new goal for bilateral trade, aiming to more than double total bilateral trade to $500 billion by 2030. Deposit Insurance The government is "actively considering" raising the deposit insurance limit beyond the current Rs 5 lakh, Department of Financial Services Secretary M Nagaraju said on Monday. The government official’s comment come days after the New India Co-operative Bank was placed under moratorium by the RBI after Rs 122 crore was not accounted for in the bank’s books. “The point of increasing deposit insurance limit is under active consideration. As and when the decision is taken, we will inform,” Nagaraju said. He declined to comment on the co-operative bank’s issues saying RBI is ceased on the matter. The Deposit Insurance and Credit Guarantee Corporation (DICGC) currently insurers deposit up to Rs 5 lakh. The body collects premiums from banks for the cover it offers. The last time the DICGC insurance amount was increased to Rs 5 lakh from Rs 1 lakh in February 2020 in light of the Punjab & Maharashtra Co-operative Bank moratorium where a similar accounting fraud was unearthed. Replying to a separate question economic affairs secretary Ajay Seth said the cooperative banking sector is well regulated under the RBI's watch and termed the overall health of the sector as strong. A crisis at one entity should not lead anybody to cast doubts on the overall sector, he added, pointing out that it is the job of the regulator to take actions against errant entities.
Source: Economic Times
Synopsis An inter-ministerial consultation will soon finalize schemes for exporters under the Export Promotion Mission announced in the Union Budget for 2025-26. With an outlay of Rs 2,250 crore, the mission aims to facilitate exporters with easy credit access and support MSMEs in overcoming overseas non-tariff measures. An inter-ministerial consultation will be held soon to finalise schemes for exporters under the export promotion mission, announced in the Union Budget for 2025-26, a senior official said on Monday. Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi said that after the preparation of the scheme details, the ministry will seek the approval of the union cabinet. The commerce, MSME and finance ministries are working on these schemes, Sarangi told reporters here. "We are in the process of doing an inter-ministerial consultation, following which, we will prepare the details of the scheme," he said. The government on February 1 announced the setting up of an Export Promotion Mission with an outlay of Rs 2,250 crore to promote the country's outbound shipments. Finance Minister Nirmala Sitharaman has said through the mission, the government will facilitate exporters to get easy access to credit, cross-border factoring support, and support MSMEs to tackle non-tariff measures in overseas markets. Commerce Secretary Sunil Barthwal said that under the mission, a whole gamut of schemes are there and "it is fungible within those schemes". These schemes would focus on "new markets, new exporters and new products," he said
Source: Economic Times
India is hopeful that the US will “take care” of its concerns regarding additional import levies on steel and aluminium, and the proposed reciprocal tariffs during the bilateral trade agreement (BTA) discussions that are expected to begin in the next few weeks. New Delhi is also trying to decipher what will be the shape of the US’s proposed reciprocal tariff law before drawing conclusions regarding its consistency with respect to global trade norms under the World Trade Organisation (WTO), a senior government official said on Monday. “The US and India have agreed to move in the direction of mutually beneficial and fair BTA that takes care of everything, whatever they announce. We will have a mutually beneficial trade agreement. Everything will be addressed through this forum — their negotiators and ours will mutually discuss these issues,” the government official told reporters. Commerce department officials are also trying to gauge if there’s an “opportunity” for India amid tariff-related uncertainties and a threat of a larger global war due to the protectionist trade policies being rolled out by the Donald Trump administration. The department will soon hold consultations with the industry and also do a cost-benefit analysis of the evolving scenario.
This comes against the backdrop of the restart of the trade war between the US and China, and a potential tariff conflict with its neighbouring Mexico and Canada. The European Commission has also raised concerns over the US’s reciprocal trade policy and has vowed to retaliate against steel and aluminium tariffs that will kick in from March. Prime Minister Narendra Modi and the US President on Thursday (February 13) agreed to begin negotiations and finalise the first tranche of a mutually beneficial, multi-sector BTA within the next seven-to-eight months. According to the joint statement, both countries will hold talks for increasing market access, reducing tariff and non-tariff barriers, and deepening supply chain integration. The proposed trade deal will be in line with the aim to double the bilateral trade to $500 billion by 2030. However, it is not clear whether the tariff reduction under the trade deal will be implemented on a most favoured nation (MFN) basis or on a country-to-country basis. Besides, currently, there is no clarity on the scope and extent of the trade agreement. India is waiting for the appointment of the US Trade Representative (USTR). Once the American negotiating team is in place, over the next few weeks, both countries will decide on the nature of the proposed trade agreement. “The US has agreed to negotiate with us a mutually beneficial bilateral trade agreement, which will go for reduction of tariffs on both sides so that our trade can grow,” the official cited above said. The two countries have also agreed to collaborate to enhance bilateral trade by increasing US exports of industrial goods to India and Indian exports of labour-intensive manufactured products across sectors such as auto components, textiles, and gems & jewellery to the US. They will also work together to increase trade in agricultural goods. India exports agri goods worth more than $4 billion to America and that will get a further boost. During the first term of Trump, the two countries had discussed a mini-trade deal, but it was not finalised due to key differences. Thereafter, in 2021, when the Joe Biden administration took over, it was understood that they were not in favour of such pacts.
Source: Business Standard
India’s economy is unlikely to face significant impact from the United States’ reciprocal tariffs on its exports, the State Bank of India (SBI) said in a report released on Monday. Prepared by SBI’s Economic Research Department, the report estimated that the additional tariffs — ranging from 15 to 20 per cent — would limit the impact on exports to the US by only 3 to 3.5 per cent.
“We believe the flexibility shown by the leadership/ policy makers should reduce the overall incremental tariff levels close to 15-20 per cent and that would limit the impact on exports in the range of 3-3.5 per cent which again should be negated through higher export goals across both manufacturing and services fronts, as India has diversified its exports kitty, pitched value addition, exploring alternate areas and works on new routes that transcend from Europe to US via the Middle-East, redrawing new supply chain algorithms,” the report said.
The report by SBI’s Economic Research Department suggests that the overall bilateral negotiations can provide further collateral benefits to India. “While there is a lot of white noise and froth in the broader markets regarding the extent of impact of tariff on India under proposed ‘Fair & Reciprocal Plan’ that seeks to correct (from US perspectives) longstanding imbalances in international trade and ensure fairness across the board, we understand the overall bilateral negotiations provide a collateral benefit to India,” reads the report.
Need for conducive environment across major sectors
To tackle the global economic uncertainties and additional challenges like US’ tariffs on Indian exports, the report emphasises the need to create a mechanism in which cooperation between major sectors would be possible. With this approach, the broader economic challenges can be reduced further. “Through fostering a conducive environment of cooperative dynamism across Defence, Energy Security, Innovations, Technology, Critical Minerals, Maritime Security, Investments and Higher Education to name a few, the largest and most vibrant democracy stands tall as a natural ally to the US in the Indian Ocean from a strategic, as also economical perspective,” it explained.
History of India’s tariffs on US and vice versa
Notably, the trend of imposing tariffs against each other shows that the US’ tariffs on India have been increased marginally while the increase of India’s tariff on the US is noticeable. This change indicates the evolving trade policies and economic priorities of both nations. According to the report, the US tariff rate on Indian goods rose from 2.72 per cent in 2018 to 3.91 per cent in 2021, before experiencing a slight decrease to 3.83 per cent in 2022. Meanwhile, India's tariffs on US imports increased from 11.59 per cent in 2018 to 15.30 per cent in 2022.
US tariff rates on India
|
Year |
Tariff (in %) |
|
2018 |
2.27 |
|
2019 |
3.84 |
|
2020 |
3.83 |
|
2021 |
3.91 |
|
2022 |
3.83 |
(Source: SBI)
India’s tariff rates on US
|
Year |
Tariff (in %) |
|
2018 |
11.59 |
|
2019 |
13.42 |
|
2020 |
12.22 |
|
2021 |
12.52 |
|
2022 |
15.3 |
(Source:SBI)
Understanding reciprocal tariff
When two nations impose equivalent duties on each other’s imports and exports, it is called reciprocal tariffs. Designed to strengthen economic strength, this policy helps maximise revenue from global trade while promoting fairness and balance between trading partners. By ensuring a level playing field, reciprocal tariffs protect domestic interests while fostering sustainable international commerce.
Source: Business Standard
India and the US will sit together in the next couple of weeks to decide on the nature of the proposed trade agreement and finalise its broad contours, a senior official said on Monday.
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 USD 500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement (BTA) by fall of 2025. "Give us a couple of weeks to decide what is the level of ambition in the first tranche (of the agreement) that we are looking at and what is the nature of the agreement that we will be arriving at. The two sides will need to sit together and try to finalise the broad contours," Additional Secretary in the Department of Commerce Rajesh Agrawal told reporters here. The two countries have also agreed to collaborate to enhance bilateral trade by increasing US exports of industrial goods to India and Indian exports of labour-intensive manufactured products to the US. The two sides will also work together to increase trade in agricultural goods. India exports agri goods worth over USD 4 billion to America and that will get a further boost, he said, adding that there is a "tough" timeline for concluding the first tranche of the trade pact. "Both sides have agreed to do that in the next 8-9 months. So we need to get going and work on that," Agrawal said. Briefing media, Commerce Secretary Sunil Barthwal said the visit agreed to a roadmap to boost trade ties between the two countries. 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 ease norms to promote trade in services and boost investments.
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. According to think tank GTRI (Global Trade Research Initiative), for 75 per cent value of the US exports to India, the average tariff is less than 5 per cent. In contrast, India faces high US tariffs on many labour-intensive goods like textiles, garments, and footwear, ranging between 15 per cent and 35 per cent on several products.
In 2023, the US and India bilateral trade in goods and services stood at USD 190.08 billion (USD 123.89 billion in goods and USD 66.19 billion in services trade). In that year, India's merchandise exports to the US stood at USD 83.77 billion, while imports were USD 40.12 billion, leaving a trade gap of USD 43.65 billion in favour of India. The country's services export to America was USD 36.33 billion in 2023, while imports were aggregated at USD 29.86 billion. The trade gap (difference between imports and exports) was USD 6.47 billion in favour of New Delhi. During 2021-24, America was the largest trading partner of India. The US is one of the few countries with which India has a trade surplus. In 2023-24, the US was the largest trading partner of India with USD 119.71 billion bilateral trade in goods (USD 77.51 billion worth of exports, USD 42.19 billion of imports and USD 35.31 billion trade surplus). India received USD 67.8 billion in foreign direct investments from America during April 2000 and September 2024.
Source: Business Standard
Synopsis Finance Minister Nirmala Sitharaman stated that India plans to periodically review and rationalize its customs and anti-dumping duties to boost investor appeal and support its self-reliance objective. Recent measures include cutting duty rates and reducing the number of customs tariff slabs, aiming for a more streamlined and effective import-export regulation system. Mumbai | New Delhi: Reciprocal import duty cuts are part of a continuous process, and India would periodically review the structure of its customs and anti-dumping levies to help enhance New Delhi's investor appeal, Finance minister Nirmala Sitharaman said at a post-budget interaction in Mumbai Monday. Sitharaman was answering a question on the impact of tariff wars on India and domestic inflation. "Inflation related management of supplies and monetary policy is working in sync in order to favour the growth cycle," she said. In that contest, she said India is continuously reviewing its trade tariffs with an intent to rationalise the structure. "For past two years, India has taken several measures in terms of rationalisation of basic customs duty and their applications. Safe-guard duties or any anti-dumping duties are also periodically reviewed," Sitharaman said. "We are building to be an investor friendly country and as a result, the duty cuts and rationalisation we have announced (are part of) continuing process, and we will keep doing that." At a separate city event to mark the International Customs Day, she said the levy structure needs slimming to promote "atma nirbharta (self-reliance)", the stated economic objective of the Centre She noted previously customs duties on some goods were as steep as 150%. "The duty rates (had) some unbelievable figures of 150% to 100%... Is this the era of that kind of duties even while we speak about atma nirbharta?" the FM asked. The minister said customs duties should be there to regulate imports and facilitate exports - and not be seen as a revenue generating instrument. She added that high rates cannot be the only way to stop unwanted imports. The FY26 budget proposed significant changes to customs tariffs, reducing the total number of slabs to 8, including the zero rate, from 15 earlier. Finance secretary Tuhin Kanti Pandey said reciprocity in tariffs between India and the US is still only an intent, and what form it will take will be known only after negotiations. "We had already done a lot of rationalisation. For example, in industrial goods, we have about 8,000 tariff lines and 6,000 of those are below 10%. Tariffs for the thirty most important imports from the US into India are between 0% and 2.5%," Pandey said. "Very few items are at a higher duty, as are also textile and apparel exported to the US from India. Those are the issues that will be sorted out while negotiating the trade agreement."
Source: Economic Times
Synopsis India and the European Union are set to hold the next round of free trade agreement talks from March 10 to 14, while India's Commerce and Industry Minister will meet with the UK's Minister of State for Trade Policy on February 24, followed by India-UK FTA talks restarting on February 25. India and the European Union will hold the next round of talks on the proposed free trade agreement (FTA) from March 10 to 14, a senior government official said on Monday. Additional Secretary in the Department of Commerce L Satya Srinivas said that before the round the entire delegation of the European Commission will be in India from February 28. Days before the visit of the European Commission team, UK's Minister of State for Trade Policy Douglas Alexander will be in India for a meeting with Commerce and Industry Minister Piyush Goyal on February 24. On February 25th, officials of India and UK will restart talks on the free trade agreement. "We have taken stock of where we left in the last round (14th) and will take it forward during the visit," Satya Srinivas said.
Source” Economic Times
US trade policy presents another hurdle to the economic recovery in developed Europe in 2025, Fitch Ratings said in a new report. Easier financing conditions should offer some support to growth and could facilitate increased merger and acquisition (M&A) activity, it noted. The likely introduction of broad-based US tariffs on EU imports will reduce the contribution of net trade to eurozone gross domestic product (GDP), dent confidence and investment and compound German exporters’ challenges, the global rating agency said. The potential for more extensive US tariffs than envisaged adds risk to Fitch’s 1.2-per cent baseline eurozone 2025 GDP growth forecast, it said in a release. High household savings rates and political uncertainty have also held back the recovery in some large European economies, although structural improvements have increased Spain’s GDP potential. Concerns about growth coupled with confidence that inflation is returning to target mean Fitch Ratings expects ECB to reduce the deposit rate to 1.75 per cent—below its 2-per cent estimate for the neutral rate—by July. The rating agency’s baseline expectations are for stable corporate credit metrics in 2025. Easier financing conditions could facilitate M&A if weaker earnings prompt managements to consider acquisitions in response to shareholder pressure. Trade tensions that weaken consumption and pricing power are key risks to Fitch’s ‘neutral’ sector outlook for European corporations. New tariffs may primarily affect sectors that export to the United States or depend on imports of intermediate parts. High sector exposure does not automatically indicate rating pressures on Fitch-rated corporations, which are often large, diversified companies that could mitigate revenue and margin pressures by adjusting strategy and financial policy.
Source: Fibres2fashion
Eight distinguished Peruvian fashion brands will demonstrate the nation’s exceptional textile capabilities at Coterie New York, one of the world’s most prestigious fashion trade shows. From February 18 to 20, brands including Balkanica, Carla Testino, De Loreta, Estrafalario, Fringe Mod, Hera Concept, Kero Design, and Kuna will present collections that seamlessly integrate traditional craftsmanship with contemporary design. Peru offers international fashion brands multiple compelling advantages in textile and apparel production. The country stands out as a global leader in premium raw materials, particularly alpaca fiber and Pima cotton, which are renowned for their superior quality and unique characteristics. Alpaca fiber, prized for its luxurious texture and thermoregulating properties, provides exceptional warmth and breathability, while Pima cotton offers unparalleled comfort and durability. A significant competitive edge for Peruvian manufacturers comes through the U.S.-Peru Free Trade Agreement, which allows garments to enter the U.S. market duty-free. This economic benefit enables brands to maintain high-quality standards while reducing production costs. Sustainability represents another critical strength of Peru’s fashion industry. Manufacturers prioritize responsible sourcing, implementing practices such as organic cotton farming, humane alpaca shearing, and partnerships with rural knitting cooperatives. These initiatives demonstrate a comprehensive commitment to ethical and environmentally conscious production processes. Peru’s textile industry distinguishes itself through an integrated, full-package manufacturing approach. This comprehensive model covers everything from fabric sourcing and design to final garment production, ensuring efficiency, consistency, and superior quality. The industry’s flexibility allows it to serve both emerging designers and established international brands with equal expertise. Through PROMPERÚ’s strategic efforts, Peru is positioning itself as an innovative and reliable global fashion partner. By showcasing its top brands at Coterie New York, the country illustrates its capacity to merge traditional craftsmanship with modern design trends, meeting the sophisticated demands of international markets.
Source: City Buzz
