India, US make the right moves to improve trade ties

Representational Image. Source: Reuters

At a recent event held in New Delhi, minister of commerce and industry Piyush Goyal stated he was eyeing an ambitious bilateral, trade target of trillion dollars between India and the United States by 2030. Currently, that number is ~$150 billion.

Goyal stated that “posterity would hold us responsible for not getting these two democracies together”, and that it behoved Washington and New Delhi with their shared democratic values, the diaspora connect, and synergy across technology and innovation to further this trade partnership, in order to benefit the global community at large.

On November 23, the US-India Trade Policy Forum (TPF) resumed dialogue after a hiatus of four years, after US Trade Representative Katherine Tai’s maiden visit to New Delhi as US President Joe Biden’s trade czar. Tai and Goyal put out a joint statement after the twelfth ministerial-level TPF, and espoused a shared vision for “the future of the trade relationship”, as bilateral merchandise trade in the current year is poised to cross the $100 billion mark.

Goyal touched on the reforms and progress made by the Government of India, namely the infrastructure boosts through schemes such as Gati Shakti, along with the $1.5 trillion National Infrastructure Pipeline (NMP) in green and brown field projects. The creation of an asset reconstruction company to resolve bad assets in the banking system, reducing corporate tax to 15 percent, removing retrospective taxation, and moving towards a simplified tax regime was welcomed.

The elephant in the room was the trade deal or a free trade agreement (FTA), where Goyal reminded that India has many such agreements in place. India currently has an FTA with Japan, and there is  an early harvest deal with Australia, and the target is to have an FTA by the end of 2022.

Outside the Quad, India has the India-ASEAN FTA agreement with the 10 Southeast nations, an FTA with South Korea, and even a SAFTA neighbourhood agreement. There are discussions in advance stages for FTAs with the United Arab Emirates (UAE), the United Kingdom, and the European Union.

While India has inherently been accused of being protectionist, and abjuring from larger trade deals such as the Regional Comprehensive Economic Partnership (RCEP), it still continues to engage with RCEP members in all sincerity. In nutshell, New Delhi says it prefers an ‘honest system instead of an opaque system’, alluding to China’s presence in the trade pact, and the access Beijing would receive to Indian market if India were to have signed the RCEP.

Goyal said that India wants to deal with “likeminded democracies, that support transparent, and rules based international order.”

When it comes to trade between India and the US, it’s best described in a Frostesque sense, as both have “miles to go, before they sleep”. The US has long argued for key market access for agricultural produce, dairy products, medical devices, and high-end electronics. New Delhi feels it’s prudent to start small with an early harvest deal. India wants the resumption of export benefits under the Generalised System of Preferences (GSP) programme.

Goyal recalled how under the Donald Trump administration, there were harbingers of such a deal fructifying but quipped how the red tape, and that too not from the Indian side, precluded it from happening.

But there was progress at the 12th ministerial-level meeting of TPF, as both sides agreed to resolve differences on outstanding market access issues for agriculture and non-farm goods, protection of intellectual property rights, and encouraging digital trade. India once again highlighted its interest in restoration of its beneficiary status under the US GSP programme, as Tai and Goyal agreed to hold TPFs at regular intervals to address the finer nuances. The TPF has now reactivated working groups on agriculture, non-farm goods, services, investment, and intellectual property.

Goyal had earlier stated that India was ready and willing to expand the economic partnership in the spirit of reciprocity, and equality. At a time of rebuilding resilient supply chains, as the recent Quad summit touched, the clarion call is for India, and the US to build on what Goyal described as the five I’s: intent, inclusion, investment, infrastructure, and innovation.

Akshobh Giridharadas is a Washington DC-based former journalist. Views are personal.

Views are personal and do not represent the stand of this publication.