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The United States intends to sell another $5-6 billion worth of American farm goods to India if New Delhi wants to win reinstatement of a key US trade concession and seal a wider pact, according to four sources quoted by Reuters.
While, India and US show deepening diplomatic and political bond, the trade between both the countries witnessed friction when US President Donald Trump cited trade barriers last year after removing India from its Generalised System of Preferences (GSP) programme that allowed zero tariffs on $5.6 billion of exports to the United States.
India reciprocated by slapping higher tariffs on more than two dozen US products.
The diplomatic talks between India and the US have already begun ahead of President’s Trump scheduled visit to New Delhi to meet Prime Minister Narendra Modi in February. Negotiators are hammering out terms and conditions for a trade deal that would include New Delhi stepping back on high tariff rates on US farm goods such as almonds, walnuts, and apples.
According to Reuters’ sources, Trump’s negotiators expect an additional trade of $5 billion for US goods to restore India’s GSP privileges. The demand was conveyed by the US to India last December.
While, India has only offered partial relief on medical device price caps and a roll-back in tariffs on some US commodities.
Calling India as one of the countries with the highest tariffs in the world, Trump’s administration has showed disappointment over India’s decision to force foreign card networks to store more data locally. The administration was also upset over stringent investment rules laid out for the e-commerce sites that impacted operations of Amazon.com Inc and Walmart’s Flipkart.
US-China strengthening trade
US administration aims to strike a trade deal with India on similar lines to that of China, but would be far smaller.
Under the US-China trade deal, China agreed to increase purchases of US products and services by at least $200 billion over the next two years in exchange for the rolling back of some tariffs, alleviating an 18-month trade dispute that had hit global growth.
“It will be challenging for the US to see a reasonable agreement with India ... without concessions on the trade gap. Given the recent deal with China, India has to follow suit,” Samir Kapadia of Washington-based lobbying and advisory firm, The Vogel Group, told Reuters.
Trade between the United States and India stood at $142.6 billion in 2018. Trump, however, intends to reduce its $25.2 billion deficit with India.
India has also proposed a commitment to increase purchases of almonds and apples from US and scrap an import tariff of 50% levied on Harley-Davidson motorcycles, one of the sources claimed. While, Trump has publicly said India’s high tariffs on such bikes was unacceptable.
India also initially offered to relax some tariffs on high-end US technology products, but that is now off the table, said one of the sources.
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