In strategic shift, India mulls a trade agreement with US -TNNHIGHLIGHTS
- For years, India has shot down suggestions of a free trade agreement with the US
- Piyush Goyal, however, said the government was in no rush and would only sign a trade agreement which safeguarded its interests
NEW DELHI: A day after opting out of the China-backed RCEP (Regional Comprehensive Economic Partnership)
, the government said on Tuesday it was exploring an agreement with the US, a move many see as a strategic shift.
"At present, India is exploring trade agreements with the USA and the European Union
, where Indian industry and services will be competitive and benefit from access to large developed markets, " commerce and industry minister Piyush Goyal
For years, India has shot down suggestions of a free trade agreement with the US and had denied that there was any move when President Trump hinted at it in a tweet a few months ago.
Goyal, however, said the government was in no rush and would only sign a trade agreement which safeguarded its interests.
The statement comes at a time when India and the US are seeking to cover the gap that separates the two sides on high tariffs on several products-ranging from Harley-Davidsons to fruits-and a possible restoration of a part of the preferential duty benefits for Indian exports under the generalised system of preferences (GSP) scheme.
"We should look at an FTA with the US. We have a trade surplus with them," an official source told TOI.
India has always sought access for its software and other professionals in return for opening up its market by lowering import duties and offering other concessions. But given the sensitivities on the visa regime, it is unlikely that the US will ease H-1B or other rules, something that Indian officials are conscious of.
"Every country has its sensitivities, which should be factored in," said a source.
The US is India's largest trade partner with imports and exports adding up to $88 billion in 2018-19. With exports of $52.4 billion, India had a trade surplus of $16.8 billion.
Another source said India was pitching for restoration of the entire GSP benefit, although the Trump administration has so far indicated a partial reinstatement of the concessional duty regime.
In recent years, the US has emerged as a crucial ally for India though differences over trade issues often cast a shadow on the burgeoning partnership. A trade deal with the US, at a time when worries over Chinese imports flooding the local market saw India walk away from RCEP, will underscore the growing convergence with the US as well as suspicions of the giant across the border.
In the past, lobby groups such as the US-India Strategic Partnership Forum have suggested that an FTA could hold the key to resolving disputes.
A forward movement for the same will signal a major change of stand, considering the old wariness about the US stand on intellectual property rights, especially the patents regime for pharmaceuticals, as well as other areas of interest such as investment, where the US wants the same treatment for its companies as Indian entities even before they invest in the country. In bilateral trade agreements, too, the US has usually sought a tighter regime for state-owned enterprises, which limits the space for governments to offer preferential treatment.