India-US BTA talks being eyed by potential FTA partners for similar concessions
The Hindu BusinessLine | 4 April 2025
India-US BTA talks being eyed by potential FTA partners for similar concessions
By Amiti Sen
India has to be careful while offering tariff cuts to the US as part of the India-US bilateral trade agreement (BTA) being negotiated. Other trade partners, such as Australia, the EU and the UK are eyeing matching concessions by pushing for an ‘MFN’ (most favoured nation) clause in their own trade pacts with New Delhi, sources said.
Under the MFN clause in a trade pact, if one country negotiates a better deal with a third country, the same deal automatically applies to other countries under the MFN clause.
“When India is deciding on duty cuts for the US under the India-US BTA, it has to keep in mind that its other major trading partners that are already negotiating trade pacts would expect the same and are even asking for it,” a source tracking the matter told businessline.
Australian pact
In the India-Australia Economic Cooperation Trade Agreement (ECTA) implemented in December 2022, India offered to provide Australia MFN treatment on wine, such that if India provides more favourable market access to another future FTA partner, it must provide the same to Australia.
“Australia is now looking at inserting the MFN clause in the full-fledged Comprehensive Economic Cooperation Agreement it is negotiating with India. It is following the negotiations between India and the US with interest as it hopes to get similar concessions,” a source close to the Australian government said.
This means that if India agrees to lower tariffs on items such as apples, almonds and alcohol for the US, Australia’s expectations would be the same.
The EU, too, wants an MFN clause in the FTA it is negotiating with India and hopes to conclude by the end of the year, the first source said. “In the next round of FTA negotiations in New Delhi in May, talks on the MFN clause is likely to feature prominently,” the source added.
When UK Secretary of State for Business and Trade Jonathan Reynolds visited India in February to resume FTA talks with India, the importance of offering concessions to trade partners on an MFN basis was emphasised, the source said.
Similar demands
There is a chance that trade partners like New Zealand, with which India has just agreed to start negotiating an FTA, would also want concessions similar to what would be offered to the US and it will be difficult to deny.
“When India weighs the implications of opening up its markets for the US, it has to factor in similar demands from its other trade partners as well as for some products, for instance wine, the competition may be stiffer from other countries,” the source added.
