India, US likely to sign trade agreement by mid-March: Piyush Goyal

New Delhi (PTI): India and the US are likely to sign the first tranche of the much-awaited bilateral trade agreement by mid-March, that would lead to Washington lowering import duties on Indian imports, Commerce and Industry Minister Piyush Goyal said on Thursday.

Following the signing of the pact, India will begin reducing import duties on certain goods imported from the US.

Goyal also said that the two countries are expected to finalise and sign a joint statement on the first tranche of the bilateral trade agreement within 4-5 days, following which tariffs imposed by America will come down to 18 per cent.

The two countries finalised the agreement earlier this week. Under this, tariffs on Indian goods entering the US will be reduced to 18 per cent from 50 per cent.

At present, Indian goods attract 50 per cent import duty, comprising a 25 per cent reciprocal tariff and an additional 25 per cent levy for purchasing Russian crude oil.

"The first tranche of the bilateral trade agreement (BTA) is almost ready, and we expect that in the next 4-5 days, we will finalise and sign a joint statement between the US and India. And based on that, the first phase of this partnership will begin," he told reporters here.

He added that a formal agreement is being drafted, which may take a month or a month and a half, he said, adding it is likely that the formal agreement will be signed by mid-March.

The reduced 18 per cent tariffs on Indian goods will come into effect through an executive order of the US, which would be issued in a day or two after the signing of the joint statement.

Goyal added that there is no investment commitment in this pact.

Commerce Secretary Rajesh Agrawal said that the legal agreement will give us the authority to reduce tariffs on American goods.

"Indian tariff reductions (will happen) only after a legal agreement," Agrawal said, adding Indian tariffs are MFN (most favoured nation) levies, and American import duties are executive tariffs.

Goyal added that "we hope to do things fast because there are further concessions that we will get after the legal agreement".

About the USD 500 billion purchase part of the deal, the minister said that with the fast-paced growth at which India is going ahead, the country will need large volumes of energy, data center equipment, and ICT products.

"Our steel capacity is going to double from today's 140 million tonnes to about 300 million tonnes in the next few years. And therefore, when we estimated what we will need from the USA, we came to a figure of at least 500 billion dollars. We can clearly see before our eyes the potential that we can procure from the US over the next five years," Goyal said.

India's aircraft demand alone, he said, "orders placed on Boeing and yet to be placed but ready, are nearly 70-80 billion dollars. If you add the engines and other spare parts, it will probably cost 100 billion dollars," he said, adding that for data centers, huge concessions have been announced in the Budget.

"Now imagine if we get 100-150 billion dollars of investments in data centers, we will obviously need equipment for those data centers," he said.

The minister further said that to meet the USD 500 billion bilateral trade target between the two countries, set out in February 2025, India will certainly need to do a lot more exports and a lot more sourcing between the USA and India.

On this, the secretary said that all the things that India has committed to buy as part of this deal with the United States, the country's current purchases from the globe are over USD 300 billion.

The US can provide all these goods, such as Oil, LPG, LNG, aircraft, ICT products, laptops, smartphones and data centers equipment, which India is purchasing from other nations.

"In the next five years, these purchases are going to be 2 trillion dollars. If we canbuy 500 billion dollars from the US, it will only add to our diversification and resilience in our supply chain," Agrawal said.

The signing of the joint statement will happen virtually.