Relevance: GS-2 (International Relations – Trade Policy) | Source: Indian Express, Ministry Statements

News: India has given the United States a revised “final” trade offer and seeks removal of the additional 25% U.S. penalty tariff linked to India’s import of Russian oil. 

What Is the Current Negotiation About?

Key Points

  • The U.S. imposed a 25% penalty tariff on certain Indian goods in 2023 due to India’s Russian oil imports.
  • This penalty is in addition to existing reciprocal duties, making the total tariff 50%.
  • India has offered tariff cuts on:
    • Almonds, apples, walnuts
    • Some industrial goods
    • Luxury motorcycles

India’s Stand

  • Exporters can absorb 25% tariffs, but 50% tariffs significantly reduce profits, forcing them to cut margins to retain U.S. customers.
  • India wants the penalty removed first; the rest of the agreement depends on U.S. political approval following its elections.

Significance

Resolving the tariff dispute would restore predictable market access and deepen India–U.S. economic cooperation.

Prelims Value Box

Key Concept

Tariff Retaliation: A trade measure where a country raises duties in response to another country’s actions—outside or within World Trade Organization rules.

Important Institution

Office of the United States Trade Representative (USTR):
The U.S. agency responsible for trade enforcement and tariff decisions.

Q. Consider the following statements regarding the India–U.S. tariff issue:

  1. The additional 25% tariff imposed by the United States on India is linked to India’s import of discounted crude oil from Russia.
  2. India has offered tariff reductions on both agricultural and industrial products as part of the negotiation package.
  3. The penalty tariff was imposed under a World Trade Organization dispute-settlement ruling.

How many of the above statements are correct?
A. One only
B. Two only
C. All three
D. None

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