India's exports to the US will be subject to tariff rates negotiated under the proposed Bilateral Trade Agreement (BTA) once the ongoing Section 301 investigations are completed and a trade deal is concluded, according to Commerce Ministry sources.
However, if the agreement is not in place by the time the investigations conclude, Indian exports will continue to face the standard Most Favoured Nation (MFN) tariff rates, officials said.
The Indian negotiating team is focused on securing tariff concessions that ensure Indian exporters remain competitive vis-à-vis other major exporting nations.
"If the US wants to impose any additional duties, it must first complete the Section 301 process. Once the investigations are over, tariff rates will be determined by the terms negotiated under the agreement," a government official said.
The temporary 10 per cent additional tariff imposed by the US is scheduled to expire on July 24. Thereafter, only MFN tariff rates would apply to US trading partners in the absence of any separate arrangement. Sources added that once a trade agreement is signed, tariff decisions would be implemented through an order issued by the Office of the United States Trade Representative (USTR), rather than under the Section 301 framework.
With the Section 301 investigations expected to conclude within the next 30 days, officials indicated that negotiations on the BTA are also progressing towards a conclusion. Commerce and Industry Minister Piyush Goyal had last week expressed confidence that an India-US trade agreement could be finalised by July.
According to sources, both sides are likely to review the findings of the investigations before moving towards the final stages of the agreement. India is seeking tariff treatment that is more favourable than that available to competing exporters, particularly other Asian economies that have significant access to the US market.
Under Section 301 of US trade law, the US government can investigate and take action against foreign practices it considers unfair, unreasonable or discriminatory, including issues related to labour standards, industrial overcapacity and other measures deemed harmful to the US economy.
