Why an India-U.K. trade deal does not make U.S.-India agreement any easier

Hello, this is Ganesh Rao, CNBC correspondent, written from London. This week, I look at India’s readiness and restrictions to conclude commercial deals after it sat with the country’s Minister of Trade. Enjoy!

This report is a “Inside India” newsletter in CNBC for this week, which brings you a timely and timely news to emerging power and major companies behind the height of a meteor. Like what you see? You can subscribe here.

The big story

Just one week after India obtained a free trade agreement with the United Kingdom, US President Donald Trump said on Wednesday that he would slap 25 % of the customs tariff in the country of South Asia starting from August 1.

By protecting favorable terms in its deal with the United Kingdom and bargaining to get more concessions with the United States, the Indian government has so far responded with caution, saying it was studying its effects.

Trump’s move also represents a sharp reflection of the optimistic tone of recent negotiations with the White House.

When I met the Indian Minister of Commerce, Joach Joyal only last week, he told me that The conversations were “progressing very well” And that it was confident that India would secure “a preferential tariff compared to our peers and competitors.”

Scheme with Britain

Nevertheless, the fissure with Washington is a world far from the positive mood surrounding the comprehensive economic and commercial agreement that concluded with the United Kingdom earlier this month.

The deal is expected to be Britain’s GDP has strengthened £ 4.8 billion annually And increasing bilateral trade by 25.5 billion pounds in the long term, according to the UK government.

It can also add 2.5 billion pounds from additional revenues to British government treasures by the end of the day, according to the economists in Deutsche Bank.

The deal is mutual, which means that the UK will eliminate the customs tariffs on 99 % of all Indian goods, an increase of about 73 %, which causes the active tariff rate of Indian exporters approaching scratch, according to the team led by Sajid Qinwi, head of economists in India in JPMorgan.

The customs tariff will be cut on Scotch Whisky, which is major exports in the United Kingdom Amazing 150 % to 75 % On the first day of the agreement and it will be deported to 40 % during the next decade. Likewise, the customs tariff for cars in the UK, which can reach 110 %, will be reduced to 10 % under the new shares system.

Keshav Morgish, President of the Indian Industry Federation in the United Kingdom of India, and CEO of WNS. “It is a strategic partnership suitable for the future now.”

Some friction continued

Despite the comprehensive nature of the agreement, the final deal does not include an India’s carbon tax exemption in the United Kingdom, which is scheduled to start in 2027.

Joyl said that India will oppose any such measures, which he described as “unbearable barriers.”

Joyl said: “India will continue to explore every option available to us within the framework of the World Trade Organization to prevent such measures from harm to trade between the two countries.” “We deserve the right to take appropriate measures under international law.”

The two countries also did not reach an agreement on a new investment treaty as part of the commercial deal.

India came out of the previous investment treaty with the United Kingdom and several other countries in 2017.

Goyal reduced the importance of her absence, indicating that foreign direct investment in India “only grew by leaps and borders” although there are no these investor protection guarantees.

Decally, India also did not allow the access to the customs tariffs of notes and agricultural products in the United Kingdom.

Nearly half of the population of India participates in agriculture, and the government looks at them as a sensitive vote bloc.

“We are always very sensitive to our farmers’ interests, and our interests [Micro, Small and Medium Enterprises]Joyal said: [vowed feels a bit strong]

Here, India’s willingness to open its markets seems to have reached its borders, where US President Donald Trump is feverish Participants on social truth He indicates.

India faces a challenge by complicating the principle of the “most preferred nation” of the World Trade Organization. The MFN condition requires that any introductory reduction to one country be extended in bilateral negotiations to all other members of the World Trade Organization.

If India waives the demands of the United States to reduce customs tariffs on sensitive products such as agriculture, it is likely to be obligated to provide the same conditions for competitors such as the United Kingdom and the European Union, which may lead to wider trade liberation, albeit unintended and multiple.

The result of negotiations with the United States will be a distinctive test for India officials.

“I think people trust in India. People enjoy working in India. India is the place of the procedure. India is the fastest growing economy in the world today,” Joyal added.

Currently, though, the procedure is focused on obtaining a deal on the line with the United States.

You choose the top TV on CNBC

Sakshi Gupta, the main economist at HDFC, said that while government spending, infrastructure support and capital goods are still strong, the growth of consumption in India is backward, “said Sakshi Gupta, the main economist at HDFC.

Abhinaf Bahriti, head of the capital market in India at JPMorgan, said that the raising of capital in subscriptions usually takes a “break” when there are severe fluctuations in secondary markets.

Anophotette Sahai, head of economics research at India at Standard Chartered Bank, said India can absorb the cost of transformation from Russian oil to the United States if it hit the sanctions.

You need to know

US President Donald Trump announces 25 % of the customs tariff in India. In addition, the tax, India will also have to pay a “penalty”“For its commercial policies, which Trump sees unfair, and to buy military and energy equipment from Russia, the president announced on Wednesday.

India excels China in the export of smartphones to the United States According to the research company data, 44 % of the smartphones were imported during the second quarter Gathering in IndiaHigher than 25 % of China.

Chinese citizens can get Indian visas again. New Delhi resumed Issuing tourist visas for Chinese citizens On July 24. The cancellation of the escalation of tensions between the two countries is that which is The strikes circulated in June 2020 On the disputed Himalayas borders, according to Reuters.

– Yeo box ping

In the market

Indian stocks lost Steam this month with Elegant 50 3 % decrease index for this month. The index increased by 4.7 % this year.

The return of Indian government bonds increased for 10 years to 6.35 %, flat from last week.

Upcoming

August 1: The Shaanti Gold International IPO, HSBC Manufacturing PMI in July

August 5: ADITya Infotech and Non-Bank Finance Company Laxmi India Finance IPOS, HSBC Services PMI in July

August 6: The interest rate decision at the Indian Reserve Bank, the Pre -building Company for Engineering M & B, Real Estate Company, SRi Lotus Developers, Really, and Deposissism National Securities Depos

Every day of the week, CNBC’s “Inside India” program gives you comment on the news and comments on the market on emerging power companies, and the people behind it. Livestream offer on YouTube and absorbing outstanding points here.

Display times:

we: Sunday-Thursday, 23: 00-0000 ET
Asia: From Monday to Friday, 11: 00-12: 00 Sin/HK, 08: 30-09: 30 India
Europe: From Monday to Friday, 0500-06: 00 Cet