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Trade push to top agenda of Katherine Tai’s 3-day visit
India and the US will discuss ways to boost bilateral trade during US Trade Representative Katherine Tai's visit to India. Trade between the two countries fell by 9% in the first eight months of the current financial year. Both countries are willing to discuss measures to boost trade, including easing tariff and non-tariff barriers and restoring Generalised System of Preferences benefits to India. The two countries have resolved seven outstanding disputes at the WTO, which will help boost trade. The PHD Chamber of Commerce and Industry predicts that India-US trade could reach $300 billion by 2026-27.
New Delhi: India and the US will discuss ways to boost bilateral trade during US Trade Representative (USTR) Katherine Tai’s three-day India visit starting January 12, two officials said . Merchandise trade between the two countries fell by 9% to $79.28 billion in the first eight months (April-November} of the current financial year as against $86.98 billion the same period of FY23 .
The US is concerned about a widening of its trade deficit with India as the fall in imports of American goods to India is sharper than that of India’s exports to the US; both partners are willing to discuss mutually-beneficial measures to boost trade, the two officials said requesting anonymity. According to official data, India’s exports to the US fell by 5.76% on an annualised basis in April-October 2023 to $44.47 billion and imports from America fell by 15.85% to $ 24.87 billion in the same period.
Provisional data show that the fall continued in November. India’s exports to the US dipped 5.23% in April-November 2023 to $50.33 billion as compared to $53.11 billion in the same period last year. Imports from the US fell 14.52% year-on-year to $28.95 billion in April-November 2023.
“Both partners will discuss possibilities to ease tariff and non-tariff barriers on a reciprocal basis, which may include some farm produce while keeping sensitivities of both sides in mind. Besides, the US has agreed to consider restoring GSP [Generalised System of Preferences] benefits to India,” one of the officials said.
The Trump administration withdrew GSP benefits from June 2019 as a retaliation to India’s higher tariffs on items such as automobiles. GSP benefits are tariff concessions provided by wealthy nations on exports from developing and least developed countries. The US terminated preferential tariff benefits under GSP affecting export of goods worth $6.3 billion to the US under the GSP programme in 2018, affecting about 12.1% of India’s total exports to the US that year, the second official said.
“There are several positive and mutually-beneficial developments that would be fully operationalised in the current year, which will boost bilateral trade between India and US,” he added, referring to resolution of seven outstanding disputes between the two countries that were pending at the World Trade Organisation (WTO). Legal processes and trade procedures may take up to six months to operationalise these agreements. Their impact will be visible with a lag, this person said.
In June 2023, during Prime Minister Narendra Modi’s US visit, the two partners resolved six outstanding WTO disputes through mutual agreement. Out of the six, three each were initiated by the US and India. One dispute was pertaining to a complaint by New Delhi against the US about imposition of countervailing duties on some hot rolled carbon steel flat products from India. Later, in September 2023, they resolved the last remaining trade dispute over import of poultry items, including chicken and eggs from America, which was prohibited by New Delhi related to concerns over avian influenza.
“The 14th ministerial-level meeting of India-US Trade Policy Forum (TPF) is crucial in the background of falling bilateral trade, and resolution of several outstanding issues between the two partners since June 2023,” the first official said. The 14th TPF will be co-chaired by USTR Tai and commerce minister Piyush Goyal on January 12.
According to a report by the PHD Chamber of Commerce and Industry (PHDCCI), India-US trade has potential to touch $300 billion in 2026-27 from $188 billion in 2022-23. The report — The India-US Bilateral Relations: Steady Strides into the Future — bats for a free trade agreement (FTA) between India and the US. “An FTA between India and the US could encourage trade and advance prosperity in both the economies, taking into account the dynamic trade patterns and economic welfare. This can be accomplished by removing trade restrictions, increasing market accessibility, and putting in place a reliable framework for comprehensive expansion across numerous industries that benefit mutually,” it claimed.
