India, US Trade Talks (24 July 2020)
India, US Trade Talks (24 July 2020)
As per Union Minister of Commerce, India and the United States are closing in on a trade deal after two years of negotiations.
The two nations have been negotiating a limited trade pact aimed also at restoring zero tariffs on a range of Indian exports to the United States under its Generalized System of Preferences (GSP), from which the Trump administration withdrew last year, citing lack of reciprocal access to Indian markets.
Summary of the Debate
About the Trade Talks
- Senior officials from both the countries have spoken in one voice for a trusted partnership. This is a new diplomatic language and is positive for the trade.
- India is in a good positions because it has earned the trust of many nations around the world, including, the United States.
- The limited trade deal, which would be signed most probably before the US election, is a step towards the preferential trade agreement between the two countries.
- India wants to negotiate with US for a preferential trade agreement for 50-100 goods and services.
Status of Bilateral Trade between India and U.S.A
- The U.S. is India’s largest trading partner, goods and services combined.
- Bilateral trade in goods and services grew by more than 10% per annum over the past two years to reach US$ 142 billion in 2018.
- Two way merchandise trade stood at around US$ 87 billion.
- Of this, India’s goods exports to the U.S. were valued at US$ 54 billion and India’s goods imports from the U.S. were valued at US$ 33 billion.
- The India U.S. trade in services stood at US$ 54.5 billion.
- Of this, India’s services exports to the U.S. were valued at US$ 28.7 billion and India’s imports of services from U.S. were valued at US $ 25.8 billion.
- U.S. direct investments in India are estimated at about US$ 44.5 billion, whereas Indian FDI in U.S. is estimated at US$ 18 billion.
- The countries have fixed target of $500 Billion by 2025.
Issues of concerns
- India wants to export generic drugs in USA. Indian drugs currently account for nearly 40 percent of supply in the US market.
- U.S.A is seeking more access for its farm goods like almonds and apples, on which India had raised tariffs last year.
- The US is also trying to get India to remove a requirement that dairy imports from that country bear a certificate showing that the animals from which the products were derived were not fed ‘blood meals’, a dietary supplement derived from blood.
- Decreasing Trade Surplus: India has miniscule trade surplus with U.S.A. it was usually 23-24 billion dollars but came down to $ 16 billion last year.
- Conservative policies of US: U.S.A imposed additional tariffs on Indian export steel by 25% and aluminum by 10%.
- Trump administration also withdrew from Generalised System of Preferences (GSP) citing lack of reciprocal access to Indian markets.
- Issues like tariffs, subsidies, intellectual property, data protection, and access for agricultural and dairy produce are also there.
- This is the time where both the nations should look at a bigger picture because there is so much to gain for both the countries.
- This is the period of pandemic and the economy is slowing down in both the nations, so there should be the sense of urgency.
- Geo-strategic significance: The geo-political tension brewing in the Indian Ocean Region (and on the borders of India and China) and economic cornering of China is a call for further strengthening of the U.S. India ties.
- Both the countries have done a great work on defense and security front. This is the time to tap the potential in economic sector.
Trade talks have progressed well and are in the final stages, whether a trade deal will be signed before or after the election in US remains to be seen. There are several issues that need to crash out and both the nations are doing that. We need to look at the bigger picture and must not allow the small irritants to take the centre stage. This is a golden opportunity for both the nations
Main Points Made by the Guests
1. Ashok Sajjanhar, Former Ambassador
2. Alexander Slater, Deputy Managing Director, USIBC
3. Yoshita Singh, Chief Correspondent, PTI, New York