By Admin 
India US Trade Deal: Talks regarding trade deal were going on between India and America for a long time, but despite continuous talks, no concrete result was being achieved. During this period, America had imposed high tariffs of up to 50 percent on India, which had a direct impact on many export sectors of India. The situation had become so bad that the government had to compensate for the losses by giving bailout packages to the affected industries.
Meanwhile, late on Monday night, US President Donald Trump suddenly announced that a major reduction in the 50 percent tariff imposed on India is being made and now it will be reduced to only 18 percent. This announcement gave great relief to the Indian industry and exporters. After this, Prime Minister Narendra Modi also confirmed this trade deal.
This agreement has come at a time when India has already signed a free trade agreement with Britain and the European Union (EU). In such a situation, it is natural to raise the question that how was the deal with America suddenly sealed, why did Trump agree and how much will India actually benefit from this?
What is the benefit of trade deal?
According to IIMC Professor Shivaji Sarkar, after this deal, the American tariff rate on India has definitely reduced from 50 percent to 18 percent, but this relief is not completely satisfactory. Actually, normal tariff rates in America are around 5 percent. In such a situation, India is still being taxed at much more than the normal rates.
He says that in the changed circumstances, India’s exports will become more expensive than before. This can have a direct impact on the demand for Indian products in the American market. Exporters will have to change their prices to stay competitive, which will not be easy. That means there has been relief, but the challenge still remains.
Another pressure on India
According to Shivaji Sarkar, along with the reduction in tariff, a new pressure has also been created on India. Under this agreement, India will have to import about 500 billion dollars from America. This import will not be in a year or in any fixed time frame, but in the form of total value, but still it is a big economic liability for India.
This import also includes Venezuelan crude oil, whose quality is not considered better than other sources. This is heavy crude oil, which is expensive to refine. Not all refineries in India are suitable for this, only one or two refineries can process it.
Additionally, Venezuelan oil is usually refined on the US East Coast and surrounding areas. In such a situation, the logistics cost of importing oil from America or South America also increases, which puts additional burden on India.
Will this deal be costly?
Domestic consumers are also an important aspect of this entire equation. When the cost of import and production increases, the government faces a big challenge as to how much relief it will be able to provide to domestic consumers.
Apart from this, India was earlier importing cheap crude oil from Russia, which definitely benefited some companies, but its benefits were limited to reach the common consumers. Trump also said on this issue that buying oil from Russia is indirect funding of Ukraine war and now after this trade deal, there is a possibility of the war ending.
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