Leaders of both nations have to look at meaningful and time-bound solutions to address each other's concerns on emerging trade issues
In the run up to President Donald Trump’s maiden visit to India, a bunch of eye-catching, US Secret Service men have started fanning out in locations which the leader is expected to visit. Make no mistake, that’s not the only spectacle India will witness for the next week or so. “Namaste Trump” formerly “Kemcho Trump”, promises to be a grander display of abundance and strategic friendship than “Howdy Modi” in Houston. Trump has already made statements on being “Number one” on Facebook, ahead of Modi, and expressed elation over the millions and millions of people who are expected to greet him in India.
Meanwhile, thousands of eyes would be scanning for inches or miles moved in the crucial Indo-US strategic partnership corridor. Trump is keen for India to open up its markets further for US goods and services and act as a key balancing partner in the region that is facing threats of dominance from China. Pushing his “America first” policy, Trump has been chipping away at any preferential treatment to India, specially in the field of trade. A few days ago, he declared India with a national average income of $2,000 and, therefore, an approximate $3 trillion economy as “developed” at par with China. He thereby justified taking India off any list of a preferential trade policy. Perhaps in the same breath a US-based think tank World Population Review has ranked India as the fifth-largest economy, overtaking the UK and France. While it may have led to celebrations in some quarters, many look at this development under the bleak prospect of a meaningful trade deal.
India’s key ask from the US at this stage is a reinstatement of the Generalised System of Preferences (GSPs) programme which will allow it to export nearly $6 billion worth of goods to the US under nearly zero tariffs. While it may be less than 10 per cent of India’s overall exports to the US, it is a sticking point. Several trade watchers and policy analysts have indicated that the US is pushing for an increase of nearly $5-$6 billion in additional trade value of goods. Hopeful of a deal, nearly $3.5 billion defence agreements between India and the US are ready to be signed when Trump visits India. These include nearly 30 armed helicopters mostly meant for naval operations, a key tool in the strategic Indian Ocean where China has been seen flexing its maritime muscles. Whether a sale of weapons and military copters will be seen within the broad contours of Indo-US trade, will be a complex question to answer.
That leaves — fraught with screaming lobbies on both sides — high attention agricultural produce and medical equipment sectors. In the run-up to the visit, reports have surfaced of India’s willingness to allow low tariff import of some frozen meat products, along with berries and nuts. Conditional import of dairy products with strict compliance to the vegetarian nature of the produce, could also be made. Limited concessions on medical devices’ price caps imposed in the post-GSP era, can also be brought to the table.
However, right now chances of a restricted or “mini” trade deal are also looking like a distant possibility. US Trade Representative Robert Lighthizer, who was supposed to be in India at least a week before Trump to given final contours to the deal, has given it a pass, substituting it with hectic video conference calls with his Indian counterpart Commerce Minister Piyush Goyal. It is unclear if the duo would be able to strike a lighting deal in under a week to come up with crackling billion figure hopes.
Many point at previous last-minute dashes for making major announcements, sometimes literally minutes ahead of crucial leadership meetings. Take the example of US support to India’ permanent seat at the UN Security Council, a decision which was taken “15 minutes” ahead of then President Barack Obama’s address to the Indian Parliament. This gives rise to hopes of a fig leaf trade deal pending since the “Howdy Modi” event in Houston last year being accomplished during the “Namaste Trump” extravaganza.
This deal or no deal, from what we gather, still leaves an impactful chunk of digital trade between India and the US. Trade in services between the two nations — large portions of it digitally-aided — remains a key area of negotiation. US companies have raised concerns with Indian counterparts and the Government on the restrictive nature of tariffs and non-tariff barriers which limit the access of US tech firms to India. For instance, the upcoming Data Protection Bill has text additions which suggest compulsory data localisation and sharing of non-personal data with the Government. These are seen as growth and innovation barriers in a connected, seamless, shared digital economy of two great democracies.Technology collaboration by removing tariff and non-tariff barriers, specifically in the technology segment, could be great lever of strategic and public policy partnership for both countries. One clear area to work together is looking at developing protocols beyond fifth generation or 5G followed by communications. India and the US can be natural partners in the new digital trade world. Rhetoric and spectacle aside, leaders of both nations have to look at meaningful and time-bound solutions to address each other’s concerns on emerging trade issues while ensuring prosperity for local markets.
(The writer is Country Manager, India, ITI Council)
