India and the US need to undertake a study to assess the feasibility of a free trade agreement (FTA) and undertake a cost-benefit analysis, a report by Confederation of Indian Industry (CII) and the US India Business Council (USIBC) suggested on Tuesday, when leaders of the two nations held talks here and agreed to work towards a ‘tremendous trade deal’.

The two groups also recommended that the US consider exempting India from its extra steel and aluminum tariffs, and also extending a waiver from its sanctions for buying oil from Iran and Venezuela. In a report that recommended intervention in over a dozen areas to take annual bilateral trade to $500 billion by 2030 from close to $143 billion in 2018, the two bodies stated: “A comprehensive Economic Cooperation Agreement would reduce tariffs (custom/import duties) which could lead to an FTA further down the road. An FTA between India and US would have wide ranging ramifications for the domestic industries, and a clear cost benefit analysis would be needed to gauge its total impact.”

The interventions suggested by the report include reinstating duty-free exports from India under the Generalised System of Preferences (GSP) of the US, reducing import duties on high-end American motorcycles like Harley Davidson to 0% from 50%, drumming up a consensus on a pricing mechanism for medical devices, modifications in India’s e-commerce policy, removing high tariffs on steel & aluminum imports by the US and fostering greater cooperation in strengthening partnership in defence and aerospace among others.

Bilateral trade has grown at an impressive CAGR of 11.8% over the last two decades, said CII director general Chandrajit Banerjee. However, both the sides must work on removing irritants to achieve this $500-billion target, he added.

Nisha Biswal, President of the USIBC, said, “We have seen trade grow by over 50% in the past 5 years. But in order to see a doubling and tripling of the trade relationship, the two countries must work out a trade deal that can open markets in both directions.”