India-US trade deal off the table, working on market access issues: Goyal

India is working towards 'early harvest' agreements with UK, Australia, says Piyush Goyal

India is in “positive momentum” with respect to signing trade deals with the UK, Australia, Canada, Bangladesh, the European Union (EU), and Gulf Cooperation Council (GCC) nations, Commerce and Industry Minister Piyush Goyal said on Thursday.

While the government is working towards “early harvest” agreements with the UK and Australia as part of a larger trade pact, the US has indicated that it is not considering a new trade agreement with India, Goyal said. India, he said, would look at working with the US on market access issues to promote bilateral trade.

India has had extensive discussions with the US on a limited trade deal, but it didn't go through.

“UK is progressing well. Teams are talking to each other. Line ministries are identifying areas in which we can quickly close the deal in terms of early harvest, if possible. Instead of trying to address 11,000 (tariff) lines, we can look at their and our areas of interest and close an early harvest agreement and (then) negotiate on the rest of the agreement,” Goyal said while addressing export promotion councils.

Similarly, Australia has shown the “highest level of engagement” and significant interest to do an early harvest agreement, he said.
 

An early harvest deal is a precursor to a free trade agreement (FTA), in which trading partners reduce tariff barriers on limited goods to promote trade.

Finalising a trade deal between India and the EU may not be a smooth ride, considering there are 27 nations in the trade bloc and talks have restarted after a gap of eight years. “We will work very hard to speed it up,” Goyal said.

Considering the past experiences, India has revamped its strategy towards inking trade deals and will not allow the “same mistakes” of the past.

“We are engaging with industry to ensure that FTAs are fairly and equitably crafted. At the same time, FTAs cannot be one-way traffic. We also need to open our markets if we want a larger share in foreign markets. So, we need to identify areas where we can withstand competition. We can sort out FTAs fairly quickly if areas where we have the ability to compete internationally can be identified as part of a collective effort,” Goyal said.

“Our effort is to ensure focus on countries where we have significant potential, where we can compete better, and where market size is significant,” Goyal said.

Had it not been for the outbreak of the pandemic and elections in Canada, a trade agreement with the country would have been at a more advanced stage, the minister said.

His remarks assume significance, with India walking away from the China-backed Asian trade bloc Regional Comprehensive Economic Partnership (RCEP), which signed an agreement last year to create the world's biggest free trade bloc.

Last week, the commerce secretary had said that signing FTAs was crucial as India was not part of any local or regional arrangement.

“If an FTA with the UAE happens, FTAs with (other) GCC countries too will get expedited,” the minister said, urging export promotion councils to study FTAs and see if there were hidden opportunities in them.

On the new export boosting scheme – Remission of Duties and Taxes on Exported Products (RoDTEP) – Goyal said sectors such as steel, pharma, and chemicals were not brought under its ambit due to lack of adequate budget. “But we have an open mind to consider concerns and rectify mistakes that might have crept in, if anyone feels it is detrimental to their industry,” he said.

He also informed exporters that the ministry was setting up two separate divisions that would focus entirely on the services sector.

EEPC India Chairman Mahesh Desai said that the government should relook refund rates under RoDTEP and ensure full rebate on the taxes in the export production chain, failing which Indian engineering goods exporters could lose some of the markets.

“In addition to this, dues on account of the MEIS scheme should be cleared. The working capital limits should be increased by banks as steel prices have increased by double and freight rates by 3 to 4 times. These supports are needed to meet the $107 billion exports target for the sector in FY22,” he said.