India-US trade deal ‘more or less’ finalised, framework for preferential access being worked out: Commerce Secretary Rajesh Agarwal

The impending India-US trade deal hinges on resolving the asymmetry between India's Most-Favored-Nation (MFN) tariff regime (a World Trade Organization principle ensuring non-discriminatory trade among members) and the US system, which often utilizes executive tariffs. To facilitate this, the agreement aims to establish preferential market access, meaning goods from one country will face lower tariffs in the other compared to standard rates. This requires a specific architectural framework to manage the differentials. A finalized deal would significantly boost bilateral trade by reducing non-tariff barriers and providing clarity for businesses. UPSC candidates must understand the distinction between FTAs, Preferential Trade Agreements (PTAs), and the implications of MFN status. The upcoming FTAs with Chile and New Zealand further demonstrate India's strategic push to expand its export markets and integrate more deeply into global supply chains, moving away from past protectionist tendencies.

The article highlights India's ambition to become a global leader in fintech exports, leveraging its successful Digital Public Infrastructure (DPI) (like UPI and Aadhaar). The goal is to capture a larger slice of the global financial services market, targeting $60-$80 billion, up from current levels. This strategy involves building fintech solutions 'for the world,' particularly focusing on the Global South (developing nations in Asia, Africa, and Latin America). By sharing its DPI model, India can offer scalable, low-cost digital payment and financial inclusion solutions to these countries. A crucial aspect of this is reducing the cost of cross-border remittances (money sent home by migrant workers). Lowering the average remittance cost from 5-6% to the SDG target of 3% would have a massive developmental impact, freeing up billions of dollars for families. This demonstrates how domestic technological success can be translated into a powerful tool for economic diplomacy and export growth.

India's recent flurry of trade negotiations, including 9 trade agreements signed over the past five years covering economies with a combined GDP of $60 trillion, signifies a proactive shift in its economic diplomacy. The focus on the Global South for fintech exports aligns with India's broader foreign policy goal of positioning itself as a leader and voice for developing nations. The signing of Memorandums of Understanding (MoUs) with 23 countries for cooperation on DPI is a key component of this strategy, creating technological dependencies and fostering goodwill. The successful negotiation of complex trade deals with major powers like the United States while simultaneously pursuing agreements with varied economies like Chile and New Zealand showcases a multi-aligned approach to trade policy. The ongoing disruption in global supply chains, highlighted by rising freight costs, underscores the necessity of these diversified trade partnerships to build economic resilience.