The proposed India-US trade deal seems to hang in the balance a week before the scheduled visit of US President Donald Trump. While critical issues are still not quite ironed out, the sealing of some contracts on crude oil and natural gas sourcing seems on the cards, said officials.
Trump and his wife Melania will pay a state visit to India on February 24-25.
“Contentious issues such as market access for a number of agriculture products, dairy items and medical equipment have still not been ironed out. So, an ambitious trade deal between the two countries seems unlikely with just a little more than a week left for the visit,” a government official told BusinessLine .
India and the US, however, are likely to sign a few crude oil and natural gas sourcing contracts. Energy sourcing from the US may not be the cheapest option for India but will help trim the trade imbalance between the two countries, which is now in India’s favour.
A deal between Tellurian Inc and Petronet LNG Ltd is also likely to see more progress with the significant terms of the deal, such as price of gas import, being finalised, the official said. Further, the two countries are expected to enhance ties under the US-India Strategic Energy Partnership.
Ever since he came to power, Trump has been accusing India of not providing enough market access to American companies, although India’s trade surplus with the US is minuscule when compared to China’s.
America’s trade deficit with India declined significantly from more than $22 billion in 2016-17 to around $17 billion in 2018-19 as India started buying oil and gas from the US in 2017. In 2018-19, India’s crude oil import from the US stood at $3.6 billion, while LNG import was at $527.14 million.
In April-December 2019, India imported crude oil and LNG worth $3.7 billion and $576.28 million, respectively, from the US, making it the sixth largest supplier of crude oil, and the fifth largest supplier of LNG, to India.
The uncertainty over a substantial trade deal between the US and India, which would cover a range of targeted items — including medical equipment, a number of fruits and vegetables, dairy products, high-end bikes and mobile phones — has increased as there is no announcement yet from the US Trade Representative’s (USTR) office of the likely visit of USTR Robert Lighthizer to India prior to Trump’s visit.
Lighthizer was expected to visit earlier this month to work out the finer aspects of the trade deal in a meeting with Indian officials and Commerce & Industry Minister Piyush Goyal, but the meeting hasn’t taken place yet.
Trump’s recent remark — that he is ready to sign a trade deal with India if it is the ‘right one’ — also suggested that the pact is not finalised yet.
The US wants India to do away with price caps for medical equipment. It is also asking for lower import duties and quality and technical standards for farm and dairy products, mobile phones and motorbikes.