New Delhi: India will have no difficulty in purchasing goods worth USD 500 billion from the US over the next five years, as envisaged under the bilateral trade pact, and in fact, this is an “extremely” conservative number for a country which aspires to become a USD 30 trillion economy, Commerce Minister Piyush Goyal said on Sunday.
“My sense is we need at least a 100 billion dollar plus only for the aviation sector, in addition to oil, LNG, LPG, and crude oil,” Goyal said in an interview with PTI Videos.
According to a joint statement issued by both sides on Saturday on the framework for the first phase of the bilateral trade agreement, India has expressed its intention to purchase USD 500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products and coking coal over the next five years.
The Commerce and Industry Minister said that Indian goods facing 18 per cent tariffs will still have a competitive advantage in US markets compared to products from China and other competitor countries, which face higher levies. China has been slapped with 35 per cent tariffs, and other countries in Asia face 19 per cent and up.
At present, he said, India could source imports worth about USD 300 billion from the US that it currently buys from other countries.
“We are even today importing 300 billion dollars of goods that can be imported from the US. We are importing from all over the world. That is going to grow up to two trillion in the next five years…I told my counterparts that look, I can assure you that there is demand in India, but you have to be competitive,” he said.
Goyal said that as the country’s economy is growing at a faster pace, demand for a variety of goods ranging from semiconductor chips, high-end machinery and data centre equipment to aircraft, aircraft parts and energy goods is also increasing.
He said at present, India is importing goods worth about USD 40-50 billion from the US every year.
Citing examples where purchases from the US can be enhanced, he said big tech firms have announced large investments in India and, therefore, “my sense is that we will see 10 gigawatts of data centres” in the country, and for that India will need equipment, which the US can supply.
“We are going to need aircraft. We are going to need engines for aircraft. We are going to need spare parts. We already have USD 50 billion worth of orders on Boeing alone for aircraft. We have orders for engines,” he added.
“So, almost 80-90 billion (dollars) is already on order for the next five years. We will actually need more than that. I read the other day that Tata plans to place some more orders,” Goyal said.
Further, the country requires cooking coal for the steel industries. India is already importing about 17-18 billion tonnes of coking coal.
“When we reach 300 billion (dollars), which is a stated target, expansion is going on at breakneck speed in the steel industry. We’ll need 30 billion dollars per year for cooking coal alone. And all of these products I’m mentioning are already being imported since the Congress time, since the UPA was in power. Nothing new,” he said.
“There’s a growth in demand and consumption of all of these products. In addition, we announced in the budget that we want to promote data centres, we want to promote the AI mission, and we want to promote critical manufacturing and critical minerals processing in India. All of this will require high-quality machinery, ICT products, and Nvidia chips, as well as machinery for AI for quantum computing. Where is all of that going to come from?” he said.
He added that the most powerful technology provider is the United States.
“So, 100 billion (dollars per year) is very conservative. I think it’s extremely conservative for a country which wants to become a 30 trillion dollar economy, which India intends to,” Goyal noted.
Asked whether the USD 500 billion purchase plans from the US include orders India has already placed for Boeing aircraft, he said: “Everything that we are talking about is in continuation and includes what we already are purchasing”.
Further, he said reciprocal tariffs (RTs) on India are now among the lowest compared to its competitor nations.
These countries include China (35 per cent), Thailand (19 per cent), Myanmar (40 per cent), Cambodia (19 per cent), Bangladesh (20 per cent), Indonesia (19 per cent), Brazil (50 per cent), and Vietnam (20 per cent).
With lower tariffs, India’s labour-intensive sectors, such as textiles, leather and footwear, handicrafts, chemicals, and gems and jewellery, will be more competitively priced in the US market compared to these nations.
“So, we have to see our competitive advantage over others. And comparatively, India’s RTs amongst our peer countries, emerging market economies, and developing countries are amongst the lowest. So, therefore, we have an advantage over China’s 35 per cent, and we are 18 per cent,” the minister said.
On safeguards for a sudden jump in imports from the US, he said adequate safeguards are in place in the trade agreement to protect the interests of farmers and the domestic industry from any increase in imports.
The trade deal with the US will “ultimately help our farmers”, who are already exporting USD 50-55 billion worth of agricultural and fish products, he said.
“This is a two-page document (the India-US joint statement),” Goyal said, adding that “it’s a lot of things, which are yet to be brought in. And it cuts both ways. I’m sure the United States would equally want to safeguard, if we flood their market…It’s something, which is a normal outcome of any negotiation”.
“So, it’s work in progress…Safeguards are always there. So, it’s something which, if anybody is trying to highlight that it’s not in this two-page joint statement, is trying to mislead the people, and there’s still a lot of clarity required,” he said.
He added that India and the US have sensitivities about a certain set of products, and both have safeguards for those.
“We’ve safeguarded all of them,” he said, adding that India has not granted any duty concessions in dairy products, GM (genetically modified) products, meat, poultry, soya meal and corn.
