India has an opportunity to strike a mutually beneficial trade deal with the United States that could enhance the country’s competitiveness and efficiency, Arvind Panagariya, Chairman of the 16th Finance Commission said on March 1. He highlighted the scope for India to gain better access to US markets while negotiating reciprocal tariff reductions for its own exports.
“India has a good opportunity to do a win-win bargain with the US. It will make us more competitive and efficient,” Panagariya said. He pointed out that improved access to the US market, particularly in the textile and clothing sectors, could provide significant benefits to Indian exporters. He was speaking at the 49th Civil Accounts Day celebrations in New Delhi.
“In the process, India can ask the US for reciprocal tariff reduction as well and get better access for our exports,” he added. However, he cautioned that any move towards a tariff war between the two nations would be detrimental to both sides. “If it ends in a tariff war, that outcome will be unfortunate for either side,” he noted.
Global Trade Landscape
Panagariya also touched upon broader challenges in the global trade environment, including disruptions in the multilateral trading system. He pointed out that the World Trade Organization (WTO) is under stress, with no functioning appellate body to resolve disputes. “Global trading systems are not what they used to be. No appellate body is functioning, and the WTO is under stress,” he said.
Despite these challenges, he emphasised that India's trade-related issues are largely domestic and can be addressed through internal policy reforms. “Our issues are more about internal policy, and we must carry out reforms,” he stated.
Panagariya underscored the need for India to strengthen its position in global trade, particularly in comparison to China. “India’s share in merchandise trade is just 2 percent and in services trade is 4 percent, while China’s share in merchandise trade stands at 12-13 percent share of the global trade,” he pointed out. He stressed that with the right policies, India can chart its own path towards greater global trade integration. “With our good policies, we can forge our way out of it,” he said.
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