India’s FTA with US a ‘costly mistake,’ must opt for limited ‘Zero-to Zero’ tariff deal on 90% industrial goods: Report

India must avoid signing a comprehensive Free Trade Agreement (FTA) with the United States, as President Donald Trump's paused tariffs for 90 days to ensure trade negotiations, ANI reported citing the Global Trade Research Initiative (GTRI).

Signing an FTA may require India to make harmful trade-offs with the US. Hence, India must opt for a limited "Zero-to-Zero" tariff deal on 90 per cent of industrial goods. Europe is currently offering this deal that states an exemption from tariffs on industrial products, including cars. 

“Avoid a comprehensive FTA with the US as it would force India to make damaging concessions. It's a deal that would cost India more than it gains. Restrict to Zero for zero deal on 90 per cent industrial Goods. Europe has offered similar deal to the US,” GTRI said.

Impact of full FTA on India

It also cautioned that a full FTA with the US can become a costly mistake and hurt key sectors of India.

The FTA could weaken the minimum support price (MSP) system for farmers, bring genetically modified food imports, reduce agricultural tariffs, change patent laws to extend drug monopolies and let US e-commerce giants sell directly to Indian consumers.

These changes will impact farmer incomes, threaten food security and biodiversity, affect public health, and hurt small retailers. Cutting down farm tariffs could impact the livelihoods of many.

Reducing duties on automobiles may have an impact on India's auto industry as well that contributes nearly one-third to the manufacturing output of the country.

Trade with other partners

GTRI further criticised the practice of providing unilateral trade concessions to the US and suggested entering into FTAs with the European Union, United Kingdom, and Canada and exploring partnerships with China and Russia.

Additionally, it recommended strengthening trade ties with Japan, South Korea, and ASEAN countries. It highlighted the potential of both India and China to build joint product value chains in sectors such as chemicals, machinery, and electronics.

(With inputs from ANI)