Just 15% of Trade to be covered by India-US “limited” deal
A “limited” deal is being hammered out between India and US covering an annual trade of over $13 billion, or about 15% of bilateral shipment that includes a complete restoration of duty benefits for New Delhi under the GSP (Generalized System of Preferences).
This initial deal can also take the shape of a preferential trade agreement that would have a much higher annual trade value if an agreement on widening the coverage is reached quickly.
If India gets a good deal in textiles and garments from the US, it might consider opening up its dairy and poultry sectors partially. The US import duties for India is between 16.5% and 32% for garments.
It is expected that this deal would be evenly balanced between the partners in terms of trading value. This could even be followed by talks on an FTA (Free Trade Agreement).
India is likely to reduce tariffs on high-end bikes like Harley Davidson and dedicate greater market access to farm products like cherries as an addition to its initial offer of easing medical equipment price caps. To make it more attractive for like Abbott, India is ready to apply trade margin on coronary stents and knee implants at the first point of sale (price stockiest) in place of applying it on the landed prices.
India might also resolve the certification process for certain dairy products and market access in alfalfa, hay and pork.
This quick trade deal was suggested by Commerce and Industry Minister Piyush Goyal. He said the deal should be finalized after a few calls. Only that India and the US will have to sit down and negotiate a robust FTA but before that, they might come up with an early harvest trade agreement for 50-100 products.
India would also remove punitive duties on 29 American goods like almond, walnut and apple if the US takes back the extra tariff of 25% and 10% on Indian Steel and aluminum respectively. This shall help the Trump administration before the elections in November.
Though, America’s demands of scrapping duties on seven ICT products (high-end phones and smart-watches) is yet to be discussed. New Delhi had said that doing so would benefit less to the US and more to third-parties with greater shares (like China). It was also concluded that this would mean a customs revenue loss of $3.5 billion per year. India, instead, offered to trim tariffs.
Indian supplies of over $6 billion a year would be ensured by the restoration of GSP.
The US is looking for better trade balance with India in agriculture and dairy product through greater market access. They are requesting India cut the “not justified” tariff on automobiles, alcoholic beverages and motorcycles.
India wants the US to remove the barriers India’s exports of pharmaceutical products imposed due to stringent US patent protection laws and FDA steps.
If not for certain sticky issues, this “limited deal” would’ve been announced after Prime Minister Modi met with Donald Trump last year.
India has been highlighting that its trade surplus with the US has been shrinking as it has started importing oil and gas from the largest economy.
US Government data states that New Delhi’s trade surplus with Washington eased to $24.3 billion in 2016 to $23.3 billion in 2019. In Financial Year 20, imports from the US stood at $35.7 billion. It was up 0.3% according to the Indian government data despite overall merchandise import dropping by 7.8%. Mineral fuels and related items, gem and jewelry and capital goods are the key purchases. Gem & jewelry, pharmaceuticals and garments were the major Indian exports to the US. It stood at 1.3% up from the past year to $53 billion.