Ahead of Donald Trump’s visit, a look at three key trade issues keeping India and US at loggerheads

By: |
February 20, 2020 3:42 PM

After the US ended India's privileges under the Generalized System of Preferences (GSP) program last year, officials from both countries have been trying to seal a modest deal, wherein the two countries get equitable market access.

Namaste Trump, Donald Trump India Visit, Trump in India, Motera Stadium, sardar Patel cricket stadium ahmedabad, Narendra Modi, Trump in AhmedabadTrade issues began to crop up between two economies after the US administration rolled back benefits for India under the GPS program for developing countries.

After the US ended India’s privileges under the Generalized System of Preferences (GSP) program last year, officials from both countries have been trying to seal a modest deal, wherein the two countries get equitable market access. However, with the US President Donald Trump raising doubts over a trade deal with India, just days before his maiden India visit beginning next week, the probability of such a trade agreement appears bleak as of now. “Trade negotiators from India and the US have been working hard to add value to the bilateral economic engagement, leveraging on their mutual advantages. As Prime Minister Narendra Modi hosts Trump to a national reception, the two leaders would give a decisive lift to bilateral ties,” Assocham Secretary General Deepak Sood had recently said. With Trump casting aspersions on the deal, the trade issues may take a little longer to get resolved. Here are three keys trade issues between the US and India:

GSP

The trade issues began to crop up between two economies after the US administration rolled back benefits for India under the GPS program for developing countries. Nearly $6 billion worth of items were exported by India under the program. The US also imposed high custom duties on certain exports from India. India, too, retaliated by imposing high custom duties on certain US exports.

Exemption from higher duties

An exemption from high custom duties is being demanded by India on certain steel and aluminum products. The fifth-largest economy in the world is also asking from the resumption of export benefits to certain domestic products under the GPS. Greater market access for its products from sectors like agriculture, automobile, and auto components is also being demanded.

Increased access

The US is asking India to provide larger access to its farm and manufacturing products, dairy items and medical devices. It also wants India to lower the import duties on some information and communication technology (ICT) products. The US has also raised concerns over a high trade deficit with India. In FY19, the exports from India to the US stood at $52.4 billion, while imports were U35.5 billion. The trade deficit dropped from $21.3 billion in FY18 to $16.9 billion in FY19.

Finance Minister Nirmala Sitharaman, during a lecture at Columbia University’s School of International and Public Affairs in the US,  had recently said that the trade negotiations between both countries were going well and are expected to reach conclusion soon.

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