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Business News/ Opinion / Views/  Opinion | An India-US trade deal that must not hang fire

Opinion | An India-US trade deal that must not hang fire

Donald Trump’s utterances suggest Washington is in no hurry to seal a trade deal with New Delhi. A delay, however, would be a pity, as the differences are not too hard to resolve

US President Donald Trump (Photo: Reuters)Premium
US President Donald Trump (Photo: Reuters)

Anticipation in the country had been growing that US President Donald Trump’s visit to India, scheduled early next week, would see a breakthrough in bilateral trade ties. However, the White House began lowering expectations even before he boarded Air Force One. He is “saving the big deal" for later, Trump said, declaring himself unsure if a pact would be signed before the US presidential election in November. If this wasn’t enough of a disappointment, he also appeared to revive an old gripe that he seems to air with the rhythm and frequency of a Harley Davidson’s exhaust rumble. The US “is not treated very well by India", he said, clarifying though that he happens to “like Prime Minister [Narendra] Modi a lot". All this suggests that despite all the bonhomie between the two leaders, there is a lot of ground that trade negotiators need to cover. It is now for Indian diplomats to impress upon the US that our mutual interests are best served by speeding up the process.

A new stumbling block that appears to have arisen is a standoff over American access to India’s dairy market. Unlike Europe, Australia and New Zealand, the US is unwilling to certify that the animals used as milk sources by its dairy exporters were not raised on feed made of bovine extracts. For New Delhi, this is a matter of religious sensitivities and the government does risk upsetting a chunk of its support base if it lets in uncertified products. There are other points of friction as well. India’s removal last year from a list of countries given preferential access to the US market has been a sore point for New Delhi, while Washington took a dim view of Indian import tariffs on various US products and price caps imposed on some medical devices, for example. On some of these, there is scope for India to relent. The country could slash import duties on high-end motorcycles further, for instance, so that US-based Harley Davidson cannot be portrayed by Trump as a perpetual victim of Indian policy. Domestic motorcycle makers are unlikely to lose much market share. Likewise, other tariffs could be lowered. On medical devices, a relatively flexible policy might actually work better for the Indian market, with other policy measures adopted to keep cardiac stents and the like affordable to Indians. As for dairy products, package labelling of imports could possibly resolve the issue. In exchange, India could ask for the restoration of benefits under the US Generalized System of Preferences, a bigger quota for H1B visas for Indian professionals, and a shield from US actions against China that got India caught in the crossfire. Indian steel and aluminium need better terms of access to the US.

Granted, forging a workable deal is not as easy as apple pie, or making shrikhand, but there is no reason for discussions to stretch out for months on end. Trade usually works to the benefit of both sides. Thankfully, India doesn’t figure much in Trump’s domestic political rhetoric on making America “great again", and if a deal can be struck with China, this one ought to be easier. India has seen its exports stagnate and economy slow and, while the heady days of globalization are now in the past, it is very important for the country to pursue trade ties with large economies. Having more or less given up on the Regional Comprehensive Economic Partnership in the East, New Delhi must make headway with the West.

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Published: 19 Feb 2020, 11:48 PM IST
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