‘Come to India’: US trade deal not inked, but open for business
India and the US were unable to stitch together a mini trade deal during Prime Minister Narendra Modi’s visit despite intense last-minute negotiations but he sent out a message that India remains open for business and investment.
Commerce minister Piyush Goyal travelled to New York for negotiations with US trade representative Robert Lighthizer after an earlier round of talks in New Delhi featuring US ambassador Kenneth Juster, and it was widely expected that the two sides would announce the limited deal during the bilateral meeting between Modi and President Donald Trump.
People familiar with developments said the negotiations had mostly centred around India’s price cap on medical devices such as stents, access for American dairy products to the Indian market, India’s duties on information and communications technology products and withdrawal of benefits under the Generalised System of Preferences programme. The deal could not be worked out as the two sides were unable to bridge all the gaps, the people quoted above said.
Goyal continued his discussions with US officials and Trump has said the two sides expect to conclude a trade deal soon. “Significant progress has been made on a number of issues and we narrowed the areas of differences. The two leaders were optimistic about reaching some kind of an agreement in the near future,” foreign secretary Vijay Gokhale said after the Modi-Trump meet.
Atman Trivedi, a former department of commerce official in the Obama administration who is now managing director at Hills & Company, said a deal, if reached at all, will be “targeted” and “modest”, but the two sides could come to a “trade understanding” that would be just as significant.
“These initial steps can and should pave the way for progress on a broader basket of issues, including intellectual property, the digital economy, and e-commerce,” he said. “But this will require political will and a sustained, disciplined approach by both countries.”
However, Modi’s focus during a roundtable with CEOs of energy companies in Houston, and the Bloomberg Global Business Forum and another roundtable with CEOs of 40 leading companies such as Mastercard, Visa and Walmart in New York was plugging India as a trade and investment destination.
Following the roundtable with energy firms, India’s largest LNG importer Petronet signed an MoU with Houston-based Tellurian to invest $2.5 billion for 18% equity in the US energy major’s Driftwood project and negotiate the purchase of five million tonnes of gas per annum over 40 years.
Modi highlighted India’s economic and political strengths and pledged personal intervention to address any issues that affected investors. He attributed India’s growth story to the “rarest of rare” combination of four key factors – democracy, demography, demand and decisiveness – and spoke about his government’s respect for the business world and creation of wealth, as well as steps to spur investments, such as the “revolutionary” decision to slash corporate tax from 30% to 22%.
When concerns about India’s data localisation plans were raised at the New York roundtable with 40 top CEOs, Modi reportedly said his government will work to create a balance between the security of data of Indian citizens and business interests.
India’s growing middle class and population of 1.3 billion make it an appealing destination for US firms but concerns have grown in recent months about new data localisation and e-commerce initiatives. “The prime minister gave almost two hours of time and listened to a lot of the ideas as well as issues, and I think people were quite candid about some of the things they think India needs to do, and he was very receptive to hear those,” US-India Business Council president Nisha Biswal told CNBC.
The slowdown of the Indian economy, consistency in policymaking, increasing access to India’s retail banking sector and providing liquidity were other key issues raised in the meeting. Modi tried to calm concerns about the slowdown, according to CNBC.
Modi also highlighted his government’s move to make India a $5-trillion economy in five years and outlined plans to spend $1.3 trillion on new physical infrastructure and billions of dollars on social infrastructure. These initiatives, he said, represented investment opportunities for global businesses.
“Our people are rapidly defeating poverty, moving up the economic ladder with increasing purchasing power. Thus, if you want to invest in a market where there is a scale, come to India,” he said.
With Trump repeatedly targeting India over tariffs in recent months, even a limited trade deal will go a long way in addressing differences in trade issues that stand in sharp contrast to the otherwise robust India-US cooperation in areas such as security, counter-terrorism and defence.