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Restoration of India's Generalized System of Preferences (GSP) status by US President-elect Joe Biden and Washington quickly closing a small trade deal with it would send a very strong signal to New Delhi, according to the head of a top India-centric American business advocacy group.
In an interview to PTI, Mukesh Aghi, President of US India Strategic and Partnership Forum (USISPF), said that India and the US should close a small trade deal as a quick win and start focusing on the bigger issues.
Commerce and Industry Minister Piyush Goyal in September said most issues preventing a limited trade deal between India and the United States have been resolved and an agreement could be signed anytime the political situation in the US allows it.
India is seeking exemption from high duties imposed by the US on some steel and aluminium products, resumption of export benefits to certain domestic products under the GSP, and greater market access for its products from sectors such as agriculture, automobile,automobile components and engineering.
On the other hand, the US wants greater market access for its farm and manufacturing products, dairy items and medical devices, apart from cut in import duties on some information and communication technology products.
President Donald Trump last year terminated India's designation as a beneficiary developing nation under the key GSP trade programme after determining that it has not assured the US that it will provide equitable and reasonable access to its markets.
I think we have a small (India-US) trade deal on the table. (They) should just close that as a quick win. And then start focusing on the bigger issues. To me, that's a positive sign. I think a restoration of GSP will send a very strong signal to the Government of India that this administration knows to do business with India, Aghi said.
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As vice president of the US from 2009 to 2017, Biden among other things had emphasised on increasing trade relationships between the two countries. In fact, he had set an ambition goal of increasing the bilateral trade to USD 500 billion at a time when it was around USD 100 billion per annum. Five years later, the trade now is USD 150 billion per annum.
Kicking off the relationship with a small trade deal and restoration of GSP, which was revoked by the outgoing Trump administration, will be helpful, he said.
The GSP is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
Under the programme, nearly 2,000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress.
India was the largest beneficiary of the programme in 2017 with USD 5.7 billion in imports to the US given duty-free status.
I also strongly believe that the defense collaboration is very strong (and), is moving in the right direction, Aghi said.
According to the USISPF chief, a Biden-Harris administration will neither be transactional nor Twitter based, but would be based on mutual respect and long-term vision.
While the momentum will continue on the political side, the QUAD effort will continue, he said, adding that there would be greater collaboration happening on the economic front as well.
In November 2017, India, Japan, the US and Australia gave shape to the long-pending proposal of setting up the "Quad" to develop a new strategy to keep the critical sea routes in the Indo-Pacific free of any influence.
It's not just about a trade deal, it's about de-risking the supply chain with China, which is likely to get more confrontational in the coming months. India can play a much stronger role, he said.
Aghi said issues like Kashmir and minority rights will be discussed.
They would be discussed, but keeping the bigger picture in mind they would not be showstoppers, he said.
Aghi, who has been providing inputs to the transition team on India-US relationship, said that the Biden administration is likely to focus on a trade deal just to show a quick win.
He also expects a multilateral approach wherein the US would work with India on a host of global issues like climate change, energy security and environment.
I think you'll see a much more structural approach happening between the two countries, he said.
Responding to a question on achieving the ambitious goal of USD 500 billion in bilateral trade, Aghi underscored the need to remove impediments in growth in trade, focusing more on energy partnership and supply chain, and leveraging India on 5G.
It is also important to focus on increasing the number of students coming to the US to 500,000. Vaccine diplomacy could be another area of collaboration wherein India can help produce vaccines at a low cost, he said.
Of the view that there will be much stronger collaboration between the US and India on Indo-Pacific region, Aghi said he wouldn't be surprised if the Biden administration revives TPP (Trans-Pacific partnership) and encourages India to look at that.
President Donald Trump in 2017 formally pulled the US out of the Trans-Pacific Partnership, a 12-nation trade deal, one of the major international trade initiatives of his predecessor Barack Obama.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
