Home >Opinion >Columns >Opinion | Cost of balancing trade ties with the United States

Relations between India and the US have developed tremendously since the two countries inked the US-India civil nuclear agreement in 2008. But while in the political sphere, the two countries have expanded their relationship, in the economic sphere, the relations between the two countries have become more complex over the years.

The bone of contention for the US is India’s trade and investment policies. The former has articulated its unease on several occasions, but the most expansive of these were the two back-to-back investigations of trade, investment, and industrial policies in India, and effects on the US economy conducted in 2014 and 2015 by the US International Trade Commission (USITC). The results of these investigations have been used to lobby for changes in India’s policies.

The Trump administration has consistently argued that its differences with India hinge largely on four sets of issues, namely, the trade surplus that India enjoys vis-à-vis the US, India’s standards of protection and enforcement of intellectual property laws, government of India’s decision to impose price controls on medical devices and India’s insistence on data localization as a part of its e-commerce policy.

The US would like India to reduce its trade surplus by importing more agricultural commodities. In the past, India has provided better access to fruits and nuts from the US, but this time, the latter’s demands are somewhat larger. Although there has been no mention of the demands in the official statements of the US, there are enough signals that what it desires are the large markets for cereals. One such signal that the US had given a few years back was during the deliberations in the World Trade Organization (WTO), when it had argued that the subsidies that government of India provided to wheat and rice farmers were well above the WTO norms and must be reduced. If the Indian government accepts the US contention, production of these crucial crops in the country could become completely unviable. Is this the opportunity that the US is looking for?

India’s generic pharmaceutical industry has also been under scrutiny by the US administration for more than three decades. Although the enactment of the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and the strengthening of the patent law was a major setback for the producers of generic medicines, the government of India was able to develop a TRIPS-consistent patent law that provided opportunities to these firms to expand their operations. As a result, Indian companies have been able to supply cost-effective drugs not only to the patients in India, but, ironically, also in the US. Thus, when American patients are benefiting from the affordable medicines supplies by the Indian industry, the US administration has been undermining the interests of the former. And this is happening simply because of the administration’s unabashed backing of the global giants in the pharmaceutical industry.

Government of India’s policy to make healthcare affordable for the citizens of the country was the primary motive for the introduction of price controls on medical devices. As a result, several critical procedures are now well within the reach of ordinary people. Importantly, this move can be one of the key factors for the effective implementation of Ayushman Bharat, the flagship healthcare programme of the government.

A dominant narrative in India, and quite rightly so, is that data, the ‘new oil’ of the information economy needs, must be used for the larger good of the people. Can this objective be met if free flow of data across international borders is allowed, as the US insists?

Biswajit Dhar is a professor of economics at Jawaharlal Nehru University.

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