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Following the agreement on an interim trade deal between India and the United States, India must now focus on trade openness and structural reforms to strengthen its manufacturing base and global competitiveness, according to a report by Systematix Group.
The report noted that India should prioritise correcting inverted duty structures, streamlining logistics and customs processes to reduce input costs, and fostering assembly-based manufacturing to achieve scale and generate employment. It further emphasised the need to reduce protectionism, expand free trade agreements (FTAs), boost research and development, and ease constraints related to land, labour, and skills. It stated, "As the India and US have now agreed on an interim trade deal, India should now focus on India must prioritize trade openness and reforms". According to the report, this integrated reform approach would help discipline domestic firms through advanced manufacturing practices and embed India more deeply into global value chains (GVCs). Such measures could raise India's manufacturing share and global standing, while also mitigating risks linked to what the report described as "Trump's bargain," and unlocking long-term competitiveness. The interim US-India Bilateral Trade Agreement, declared on February 7th, establishes an interim framework tied to a broader Bilateral Trade Agreement (BTA) that was initiated in 2025. Under the interim arrangement, the US has set a reciprocal tariff rate of 18 per cent on select Indian goods, including textiles, apparel, leather, plastics, chemicals, and machinery. The report highlighted that the framework also outlines plans to remove tariffs on several key items, such as generic pharmaceuticals, gems, diamonds, and aircraft parts, subject to the successful implementation of the interim agreement. From India's perspective, the deal offers meaningful tariff relief by reducing effective US duties on Indian exports to 18 per cent. This is expected to improve the competitiveness of Indian products in the US market and provide exporters with greater pricing flexibility. The report further noted that the removal of national-security tariffs on Indian aircraft and aircraft parts is a significant positive for the aviation sector. In addition, the provision of a preferential quota for automotive parts is expected to support manufacturing growth and strengthen India's position in global supply chains. Overall, the report concluded that while the interim trade deal provides near-term relief and opportunities, its full benefits will depend on India's ability to pursue deeper reforms, expand trade integration, and align its manufacturing strategy with global standards. (ANI)
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