The United States Trade Representative made an announcement during the G20 Summit in New Delhi regarding the reduction in import duties. It came after a bilateral meeting between Prime Minister Narendra Modi and US President Joe Biden on Friday. India has agreed to reduce the import duties to an extent of 5-10% on certain fresh and processed food products, as a part of resolution in the ongoing trade dispute between New Delhi and Washington at the (WTO) World Trade Organization.
Import duties on frozen turkey, frozen duck, fresh/frozen/dried/processed blueberries and cranberries will be reduced. Presently, these products are subject to import duties ranging from approximately 30-45%. Government officials have clarified that the reduction on import duties will be based on the “Most Favored Nation” (MFN). This means that while the duty reduction arised from negotiations between India and the US, in accordance with the WTO’s MFN principle, the tariffs will be less to all the member nations of the WTO.
Although the specific details with reference to the reduction of import duties for these products have not been disclosed yet, individuals with knowledge of the situation have indicated that the finance ministry’s revenue department will officially announce the new rates within six months. This announcement is connected to the 7th trade dispute between India and the United States at the WTO, specifically concerned with the imports of poultry from the US. Remarkably, this development was followed by Prime Minister Modi’s visit to the US in June, during which both nations decided to resolve six out of seven pending disputes at the WTO. In 2015, India had faced defeat in a long-lasting dispute involving poultry imports, primarily related to chicken legs, from the US.
The largest export was made by India to the United States, where it exported goods worth $78.5 billion in the fiscal year ending on March 31, 2023. Additionally, the United States ranks as India’s third-largest import partner, following China and the United Arab Emirates, with imports nearly $50.24 billion during the same fiscal year.
Arpita Mukherjee, a professor at the Indian Council for Research on International Economic Relations, has expressed that reducing the import duties on these products will benefit hotels, food processors, and consumers. In recent times, these items cater to a specific niche, primarily applicable to high and middle-income consumers, as well as the hospitality sector. Mukherjee pointed out that these products entered the Indian market through organized retail or hotel chains rather than unorganized retail partners. The accessibility of these products to consumers may not see a significant increase even after the reduction in the import duty, and the ultimate price will be influenced by retailer margins.
She also emphasized the need for India to eventually reduce high tariffs on agricultural and food items to promote agricultural trade, particularly as the country aims to establish more free trade agreements.
