The interim India-US trade agreement has been subject to criticism by the opposition parties in India, the farmer associations and trade experts following further revelations about the agreement on Friday.
It was decided that India would buy 500billion US (PS367.4billion) of goods during the next five years but this time there was no declaration of a promise made by Delhi to cease Russian oil imports.
The nations had already declared a trade agreement earlier last week with the US imposing a cut on tariffs charged on Indian products to 18 percent rather than 50 percent.
The interim deal is still being negotiated, but there are four main questions that it has brought up.
Is India contributing more than they receive?
According to the agreement that India has pledged to cut its standard tariffs on all the US industrial goods and the number of foods and other agricultural products.
The United States will only, in its turn, reduce mutual tariffs which, in the present case, are applied to approximately 55 percent of Indian exports – reducing them to 50 to 18 percent.
This implies unequal exchange, as per the Global Trade and Research Initiative (GTRI) of Delhi based think tank.
The leaders of the opposition such as the former finance minister of India, P Chidambaram, have even claimed that the framework is skewed too much towards the US and that the asymmetry is too evident.
However, the trade minister in India Piyush Goyal has come in defence of the agreement arguing that the 18% tariff that the US has imposed on its relationship is one of the lowest rates charged to its trading partners and will improve labour intensive sectors of its trade like textile, leather and gems.
The agreement has been a thumbs up to most industry associations.
Will the capital of India become a non-buyer of Russian oil?
It is still unknown whether Delhi has committed itself to stop the purchase of Russian oil or not.
Though proclaiming the trade agreement last week, President Donald Trump stated that India had pledged this – but it is not in the concomitant message. In another executive order, Trump also indicated that the US would keep watch on whether India resumed the purchase of Russian oil either directly or indirectly and that would dictate the re-imposition of a 25 percent duty on imports to the country.
Goyal on their part, in an interview with news agency ANI said that the choice of which companies are to buy oil is made by individual companies and that the trade deal is not determining who will purchase what and where.
And Russia has reportedly not been given reason by Delhi that supplies will cease.
In media reports, Indian refiners are also not making new purchases of Russian oil but some of the deliveries still take place.
The absence of an Indian statement has given rise to the opposition claims that promises are being taken without the clarity of parliament.
The instrument of trade has been also used by the US to limit the foreign policy of India through lifting the 25% Russian oil penalty, but with the concession that India would completely end direct and indirect imports of Russia, which is a step that has been taken over X by Brahma Chellaney, a specialist in strategic affairs.
Could the deal hurt farmers?
The accord has displeased the farm unions in India who threaten that reducing tariffs on US agricultural imports would undermine local manufacturers.
In 2020 and 2021, the Samyukt Kisan Morcha, the group leading anti-protesters against the disputed farm laws in India, said that the decision to permit fewer restrictions on imports of goods like dried distillers grains, soybean oil, red sorghum, nuts and fruits would hurt the earnings of farmers.
It has also forced the resignation of the commerce minister and has set to increase protests.
GTRI state that it also lacks transparency with regards to the other agricultural products that have been added to be cut in terms of tariffs as part of the agreement.
Along with the agricultural and food items in the list of tariff reduction may create a wave of domestic backlash because the farmer groups have threatened the price undercutting in maize, soybean, dairy and nuts, Systematix Research, a brokerage house said in a note.
Goyal has added that India has not made concessions on dairy, GM products, beef or poultry and it has protection towards farmers.
He has also claimed that the contract will eventually benefit farmers since they will be able to increase their exports.
Is the purchase commitment of 500 billion by India realistic?
Within the framework, India has shown the intention to purchase 500bn of US products within the five years which includes energy and aircraft as well as technology products and coking coal.
According to critics, this is not possible.
GTRI says this would have a multiplied UK imports every year by India that has to be a full times increased amount on the imports from the US. The announcement also depends on cases made by the private sector that are not under the control of the government.
This commitment was also said to jeopardize the inflation of the India import bill and the loss of the trade surplus between India and the US, Systematix Research said, with long run effects of strain on the external balances.
Nonetheless, Goyal has termed the target as being very conservative and that is based on the increased demand of aircraft, energy and data centre equipment.
He estimates tens of billions of dollars are already in pipeline of Aircraft orders in India and the totality of imports will increase with the growth of the economy.
Although a number of unresolved issues remained, India stock markets sprung abruptly on the announcement of the deal with lower tariffs, increased energy relations to the US and more economic collaboration between the two countries likely to contribute to the growth of the country.
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