India's recent agreement with the US regarding critical minerals is seen as a major advancement in enhancing their bilateral relationship, as stated by the government. This partnership is designed to take advantage of benefits provided under the US Inflation Reduction Act (IRA), especially for the electric vehicle (EV) industry. New Delhi has suggested a Critical Minerals Partnership Agreement (CMPA) with the US, highlighting its desire to formalize this alliance.
In October, both countries signed a Memorandum of Understanding aimed at building resilient supply chains for critical minerals by capitalizing on their unique strengths. India hopes that transforming the MoU into a comprehensive partnership agreement may afford it the status of a Free Trade Agreement (FTA), allowing access to the US EV tax credit.
The IRA provides tax credits up to $7,500 for each electric vehicle, contingent upon a certain percentage of battery minerals being sourced from the US or from countries that have FTAs with it. These incentives are anticipated to attract considerable foreign investment and enhance large-scale production of EV components in India.
Trade Developments with China and Russia The review also pointed out positive developments in trade with other nations. China has granted market access for Indian exports of vital seafood varieties, including Chinese pomfret, silver pomfret, and mud crabs. Moreover, Russia has authorized the export of dairy products from two Indian facilities and has approved another establishment for exporting egg products.
Advancements in Trade Negotiations India is making strides in securing Free Trade Agreements (FTAs) with countries like the UK, EU, Oman, Peru, and Sri Lanka. Ongoing negotiations for the India-Sri Lanka Economic and Technology Cooperation Agreement have made notable headway in areas such as services and Rules of Origin.
The examination of the ASEAN-India Trade in Goods Agreement (AITIGA) is intended to tackle issues like industry losses and inconsistent tariff liberalization. This evaluation is projected to be completed by 2025.
Assistance for Exporters To bridge the export credit gap, the Export Credit Guarantee Corporation of India (ECGC) has broadened the scope of its Whole Turnover Export Credit Insurance for Banks (WT-ECIB) scheme. Effective from July 1, this program now provides coverage for working capital limits of up to ₹80 crore, aiding over 1,000 new small exporters in addition to the current 8,000.
The department also reported recovering ₹954 crore in duty and interest via a one-time amnesty initiative, which assists exporters in settling outstanding issues related to the Advance Authorisation and EPCG Schemes.
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