India Will Want Matching or Better Tariff Concessions Than China's, Observers Say

Brendan Lynch, speaking on a webinar convened by the Washington International Trade Association on U.S.-India relations, said, "It could have an impact on our negotiations. If we do offer some type of tariff concessions, India's gonna be watching those closely and will expect to get at least those same concessions, right?"

Lynch, who was responding to a question from our reporter, added: "Now India also needs to take actions to address concerns of the U.S. in order to warrant the consideration of those potential concessions on our side."

Anthony Renzulli, a managing director at DGA-Albright Stonebridge Group and a former director for India at the National Security Council, was more negative. "Lower tariffs for China, if that's where we ended up for China, on certain consumer goods, I think would really hurt trust between the U.S. and India." He added, "The implications for the trade agreement would be substantial."

On an earlier WITA panel, Ajay Kumar, who leads the Commerce section at the Indian embassy in Washington, said it's wrong to think that India is seeking renegotiation of its reciprocal trade deal because the Supreme Court struck down the International Emergency Economic Powers Act tariffs.

"For the last three, four years, we have been pushing for an India-U.S. free trade agreement," he said. "Recently, our trade team was in town. We are deeply committed to our framework deal, and we are basically on the verge of making the final shape of it. It's not that India is trying to seek renegotiation of the contours of the deal."

Similarly, Lynch acknowledged that the rapid tariff changes in the last year have caused some confusion abroad.

"I don't think the Indian government really cares what statutory authority USTR is using when it comes to tariffs. They want to ensure India's comparative advantage in the U.S. market.

"Now, obviously for us ..., in order to provide that type of assurance, India needs to liberalize their market and ensure that the trade deficit is going to come down."

He said that could be ensured by addressing non-tariff barriers, eliminating tariffs and making purchase commitments.

He pointed to import licensing requirements, conformity assessment and technical standards as some of the non-tariff barriers.

All exporters find that "things in the Indian regulatory environment change rapidly, and they make doing business challenging in the Indian market," he said.

The WITA moderator asked how the economic strain resulting from the U.S. war in Iran is affecting negotiations.

Lynch replied, "We are in a bit of a rocky time period, both because of the war in the Persian Gulf -- also because of some of the tariff actions that were taken last year."

He said it's not likely that the war would derail negotiations. "That being said, things can happen, and if the economy really does take a big hit, the political narratives can certainly change.

"But I also think India understands that they need to maintain their position in the U.S. market. And so, if we can't conclude the interim agreement and really move on to the broader components of the BTA [bilateral trade agreement], there's a risk in terms of tariffs coming into effect that may negatively impact their position in the U.S. market.

"So, even if there are some political challenges based on the state of the economy, they don't want to make that situation worse by creating a situation where they're at a disadvantage in the U.S. market and their exports get hit ... similar to how they did late last year."

Lynch noted that the U.S. is India's biggest export market.

Kumar emphasized that India and the U.S. both suffer from excess industrial overcapacity in "some geographies," which have created "large scale distortions in global supply chains," and that India wants to be part of rules-based global supply chains.