Energy, farm produce in focus as India-US trade talks gather pace

The focus of Indo-US negotiations on a potential trade deal are centered around petrochemical and agricultural tariffs, Mint and the Hindustan Times reported on Friday, citing unidentified people aware of the discussions.

Indian negotiators, led by commerce minister Piyush Goyal, are in the US advocating for increased exports of finished petrochemical products to enhance domestic manufacturing and stepping up exports of higher value petrochemical goods, Mint reported.

Goyal is heading the Indian delegation that arrived in Washington DC on Monday for a week-long discussions with US trade representatives.

While India imports raw material, primarily crude oil, and finished goods in the petrochemical ecosystem from the US, it exports refined and processed petchem products such as jet fuel, diesel to the US.

Delhi is pushing to import more raw material to bolster its manufacturing capabilities and boost jobs, the report said.

To be sure, Indian petrochemical exports to the US are subject to a 0-7% tariff, while imports from the US face a 0-5% duty.

The US exported $7.23 billion worth of petrochemicals to India in FY24, while Indian exports were valued at $5.83 billion, commerce ministry data showed, indicating a trade imbalance in favor of the US.

In the current fiscal, from April to November, US exports to India rose to $6.4 billion when compared with $2.88 billion from India.

As both India and the US negotiate the contours of a bilateral trade deal, energy imports into India are likely to see an increase.

To be sure US exports of crude oil to India in February climbed to their highest in over two years, Reuters reported this week, citing ship tracking data, as refiners in the country sought alternative supplies following tighter US sanctions on Russian producers and tankers.

The US exported 357,000 barrels per day (bpd) of crude to India in February, the Reuters report said, citing ship tracking data from Kpler. That compared with exports of about 221,000 bpd last year.

The jump in exports to India underscores how multiple rounds of sanctions imposed by Washington on ships and entities dealing with oil from Iran and Russia since October are disrupting trade with major importers of their oil.

India said last month its energy purchases from the US could go up to $25 billion in the near future from $15 billion last year.

Meanwhile, the latest round of trade negotiations follows US President Donald Trump’s threats to impose reciprocal tariffs against India, along with Canada, Mexico, and Brazil, starting 2 April.

Indian exporters of textiles, pharmaceuticals, and IT services sectors have expressed concerns following Trump’s tariff threats.

Another key focus area of the discussions is farm produce.

Both sides may agree to introduce reciprocal tariffs on agricultural products as both have complementary, not competing, capacities in a variety of items, Hindustan Times reported.

India is likely to import pulses, edible oil, tree nuts, forest products, frozen turkey, and frozen duck without adversely affecting the local farming community, the report added.

The government is closely watching ongoing trade negotiations with the US, as the 2 April deadline for reciprocal tariffs by President Donald Trump approaches, finance minister Nirmala Sitharaman said this week in Visakhapatnam.

Sitharaman said the interests of Indian exporters have been effectively communicated to counterparts in the US.

The government conducted stakeholder consultations prior to the negotiations in the US, facilitating active discussions led by Goyal, Sitharaman said, adding that the ministry is involved in ongoing data-sharing with relevant industry groups to ensure that exporters’ concerns are addressed and protected.