Each Minister handles his responsibility, says Piyush Goyal on trade deal, Russian oil

What has been the departure in this deal from India’s previous relationship with the U.S.?

I think it’s in continuation of our very strong and important strategic relationship. They are one of our most important partners in the world. We are both large democracies. We have shared interests in several sectors. We have a strong defence partnership. We have a strong technology partnership. We have a strong critical minerals partnership. We also are members of two Quads together, so it’s a very, very powerful relationship. The trade agreement further enhances our relationship and elevates it to a much deeper friendship.

But didn’t these trade issues create a knot in that relationship?

As much as we expand our cooperation and engagement with the world’s largest economy, a $30 trillion market that is opening up for us, I’m sure it will only be good for the country.

Were the negotiations difficult?

Not at all. It was just like any other negotiation. Every country has to work towards getting a fair, equitable and balanced agreement. Everybody has sensitivities, just like we have sensitivities of, let’s say, certain farm produce. They have sensitivities on certain produce on their end. Everybody ensures that you take care of your defensive interests. And clearly everybody is looking for openings, new opportunities to expand trade in a manner that the people, the businesses of both countries can benefit.

Could you give us some insight on the behind-the-scenes process?

Not at all. It was just like any other negotiation. Every country has to work towards getting a fair, equitable and balanced agreement. Everybody has sensitivities, just like we have sensitivities of, let’s say, certain farm produce. They have sensitivities on certain produce on their end. Everybody ensures that you take care of your defensive interests. And clearly everybody is looking for openings, new opportunities to expand trade in a manner that the people, the businesses of both countries can benefit.

I would think more work happened virtually. And that’s one of the learnings from COVID. Most negotiations happened virtually right until the end. I was here, my teams were here, and they were there. We would have phone calls of and on if the issue was small, if it was substantive we would have video conferences.

What was the one issue that took time to reach an agreement on?

I don’t think there’s any such issues, any one issue that was a road block to the agreement. It was a very smooth and very amiable dialogue in a very friendly atmosphere with a lot of fun and frolic and laughter and also intense negotiation.

Our red line was related to agriculture…

Largely. All of India’s sensitivities, every single one of them, have been safeguarded. The sensitivities have been protected by carefully seeing what are the products where India is self-sufficient, farmers have good production, we don’t import at present or will not be required to import, and we have excluded these from the scope of this agreement.

So meat is not covered, for example, except turkey. Poultry is excluded. Dairy is excluded. No GM food products are included. No concessions have been given on soybean, corn, rice, wheat, sugar, cereals, millets like jawar, bajra, raggi, kodo, amaranth, fruits like banana, strawberries, cherries, citrus fruits, pulses in which we are self-sufficient in India, like green peas, kabuli chana, moong, oil seeds, certain animal feed, ground nuts, honey, malt and its extracts, non-alcoholic beverages, flour and the meals made of flour, starch, essential oils, ethanol for fuel, and tobacco, among others.

So after this, the farmers have really no cause for complaint and have absolutely nothing to be worried about.

But some farmer groups, such as those growing cotton, are unhappy…

This will help cotton farmers because exports can grow leaps and bounds. We have a competitive edge in textiles compared to our competitors. Now, markets in the U.K., Europe, EFTA countries, Australia, New Zealand, so many new markets, all in the developed world, at 0% duty are going to support our textiles. In America, our reciprocal tariff of 18% is amongst the lowest among our peer group of competing economies, so effectively the demand for cotton is going to go up.

We do need to import the extra long staple cotton, which we don’t have in India in insufficient quantity. So, if we give them an opening in or a quota in cotton, it’s actually good for the Indian ecosystem. Exports will grow, and as exports grow, the demand for domestic cotton also grows.

There’s so many items where they are opening up the large U.S. market for our farm produce and processed foods to be exported. We already are a large exporter. We export $54-55 billion every year of these products. In that situation, we are now looking at how we can double that.

Sadly, the opposition parties have such a small and weak mindset that they’re trying to distort the story and misguide our innocent farms. I want them to understand that we are opening up new opportunities in Europe, US, Australia, New Zealand.

Further to that, with the U.S., we have also got 0% reciprocal tariff on a large variety of agriculture products such as spices, masalas, tea, coffee and their extract, copra and coconut oil, many nuts like areca nut, Brazil nut, cashew nut, chestnut, which you make in India, fruits and vegetables like avocado bananas, guavas, mangos, kiwis, papayas, pineapples, shitake mushrooms.

What are the areas where American demands could be accommodated?

There are many areas, like tree nuts, for example. We have been importing pistachios for decades, right from the Congress time. There are certain things in which you don’t have in sufficient quantity and we’ve done a very calibrated opening in all of these products.

Wherever we need those products, we have opened them. Wherever we think we need to also keep a restriction, we have kept quotas. In some cases, we’re giving a margin of preference, not a full duty reduction. In some cases, it’s a phrased elimination over a period of time. So, different tools have been used to protect our farmers, so I see absolutely no reason for any farmer to complain.

One general concern has been the commitment to buy $500 billion of US goods…

Well, it’s an intention. And it comes out of the fact that we have a big demand for particular goods that you don’t have in India, which we have to import. For example, energy such as crude oil, LNG, LPG, we have to import, we don’t have it in sufficient quantity in India. In aircraft, we have already placed orders worth $50 billion with Boeing. In addition to that, we need engines and spare parts. Plus the airline companies tell us they’re placing more orders.

We’ll probably need anywhere between $80-100 billion of planes and their parts and engines in the next 5 years. On ICT products, when we give concessions to data centres and hope to invest hundreds of billions of dollars in data centres and AI and quantum computing, we will need equipment, we will need NVIDIA chips and GPUs.

We made an assessment and we realised that even today we are importing $300 billion of these goods from different parts of the world. A large part of it comes from geographies where we would rather it not come from.

Is this deal concentrating our supply chain towards the US?

This $300 billion that we are importing right now is growing every year. We estimate that in the next 5 years, we will need $2 trillion of all of these products, which can also come from the US. I have a full intention to buy that and to diversify from our existing sources.

The joint statement mentions that the two countries would take “complementary actions to address non-market policies of third parties”. Is this aimed at China?

I would not like to speculate on any one particular geography, but any country that has non-market economy practises, we have to take care against such countries that distort the market. They affect jobs, business opportunities, and investments in our country, and therefore, we work with trusted partners and America is one of our most trusted partners. We would like to engage with them on these issues in a spirit of cooperation.

Our trade deals with some other countries involved liberalising Indian labour movement, but this one does not…

None of the trade deals ever deal with immigration. Trade deals have an element of people for implementing the objectives of the trade deal. So, for example, if somebody gets a contract to do the plumbing in a hotel in Switzerland, I will need to send people to do the plumbing. So trade deals only address mobility from that perspective. Even with the European Union, the deal we have provided is that if somebody goes as a student, they will get a nine month visa to be able to work there.

Every trade deal stands on its own legs, but bear in mind, immigration is never discussed in a trade deal. So even with the European Union, the mobility partnership is outside the trade deal. It’s a separate partnership.

The joint statement also had a line that says that both countries can modify their commitments if the other changes agreed upon tariffs. Did India insist on this inclusion?

It’s a standard WTO provision, that if any country changes the situation that exists at the type of entering into an agreement to the detriment of the other country, by which the effects of the free trade agreement don’t flow as they are intended to flow, then the other country has a right to rebalance. It’s also not that we are doing it for the first time.

Do you think that now the older multilateral organisations, especially economic ones like the WTO are now redundant?

Not at all. Multilateral organisations play a very important role. India respects WTO rules of trade. I believe they add value to the global order, to the rules-based global trading business. But I think we have to accept that with changing times, there will be some changes. We are actively in dialogue at the WTO to look at WTO reforms.

The question of great interest is on India’s policy on Russian oil…

I don’t deal with that subject. It is not part of my joint statement or the trade deal.

But your colleague in the Ministry of External Affairs made a statement that he’s not dealing with that issue and that you are.

See the question to which he replied. The question was about the nuances of the trade deal. So if there’s anything about the trade deal, obviously I will reply. People have mixed up two different issues. If you ask the agriculture minister about the trade deal, he can’t answer. If you ask me about what’s happening with, let’s say, the oil mission, I wouldn’t be able to respond. I would have a general idea, but I would not like to make a statement on record without full knowledge of facts. Each person handles his own responsibility.

Do you still feel that we will see the formal agreement by mid March?

Oh yes. Unlike with other countries, where we did the framework agreement and then got down to the nitty-grities, in the U.S. case, we’ve done a full negotiation of all the issues literally line by line. So, the negotiation part is nearly complete. We’ll be able to close it quickly.

The joint statement came before because the reciprocal tariff has to come down to 18%. The executive order of reducing it to 18%, we hope to see next week.