November 29, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

India-US trade didn’t quite live up to potential: USTR

The US is India’s largest export market, having made up for outbound shipment of nearly $52 billion in FY21.

The trade relation between the US and India remains a top priority for the Biden administration but the bilateral trade “never seemed to quite live up to its significant potential”, US trade representative (USTR) Katherine Tai said here on Monday.

In her maiden visit to India as her country’s chief trade negotiator, Tai flagged concerns of American “stakeholders” about what they call India’s market access restrictions, high tariffs and restrictive digital trade measures, and the need for a predictable policy regime. “These are the issues where we intend to make progress. And they will be on top of my list while I am here,” she said. Tai was speaking after meeting commerce and industry minister Piyush Goyal and other ministers on Monday.

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The revival of the bilateral trade policy forum meeting on Tuesday after a gap of four years will help keep pace with other important aspects of the India-US relationship as well, she added.

Tai said there is a huge potential of growth in bilateral trade, especially in critical areas, including digital economy and agriculture.

The US is India’s largest export market, having made up for outbound shipment of nearly $52 billion in FY21. Imports from the US stood at $29 billion last fiscal, as the pandemic hit supply chains.

“High” Indian tariff has always been a sore point with the US. India was branded “tariff king” by former US President Donald Trump, who had demanded that New Delhi slash duties on a broad range of products, even though the world’s largest economy turned more protectionist under him.

In response, Indian officials have pointed out that New Delhi’s applied tariffs are way below the permissible limit under the WTO framework, or the so-called bound rate (which was 50.8% in 2020). Also, India’s trade-weighted average tariff is much lower than the simple average one (Washington usually highlights only the latter). Moreover, unlike other large economies, including the US, India hardly uses non-tariff barriers to crack down on or discourage imports it deems non-essential or sub-standard.

Goyal pitches India as a trusted trade partner

Speaking before Tai, Goyal highlighted the unique task given to both him and Tai by their leaders “to strengthen our economic ties and trade based on transparency and fairness”. “Of course, I am sure you will bear in mind the hugely differing level of prosperity between the people of US and the people of India and the shared vision to work towards mutual prosperity of the people of both our nations,” Goyal said while welcoming Tai to India before a dinner hosted by him.

India’s competitive advantages of cost, skilled manpower and the huge domestic market, combined with American innovation and investment, can become a winning partnership, Goyal said.

Goyal said India and the US have realised the necessity of diversifying critical supply chains and are poised to play an important role in developing “trusted supply chains with other like-minded nations”. He said, despite its own challenges in the wake of the Covid-19 pandemic, India “didn’t let down any of its international commitment”, highlighting the reason why the world looks at India as a “trusted” trade partner.

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