In the changing geo-political scenario, India-US agreeing to carry forward trade talks, is the only positive outcome of the President Donald Trump’s two-day India visit which was on the expected lines. When the US on 4 March last year announced that it is withdrawing duty-free entry for Indian exports worth around $6 billion, it brought the curtains down to a year-long dialogue between the two strategic partners for hammering out a limited trade package. India and the US, despite their robust diplomatic ties, have quibbled on trade over the years and across administrations. However, President Donald Trump who pursues the “America First” approach has been personally very vocal about the perceived high tariff walls that India has put and has often called out India terming it “tariff king”. To accommodate the US complain about the $18 billion trade surplus that it enjoys, India has increased buying crude oil and civilian aircraft from the US in recent times. US fixation over tariffs, India’s e-commerce restrictions and data protection bill have put India in a spot. Any tariff cut by India to allow greater import of US goods needs to be done in a non-discriminatory manner for other countries as per WTO rules as both the countries are not negotiating a free trade agreement at present. India’s duties are moderate and not import stopping. Any most favoured nation duty reduction would almost entirely benefit third countries. With over $50 billion trade deficit with its Northern neighbor, India is obviously not keen to increase imports from China. As far as defence deal is considered it is more in America’s favour so there is no hue and cry and will have to go through easily. At present India is the largest arms importer and a traditional Russian allay any country with surplus potential would like to partner with it. That is what US has done by even offering the latest in technology platform. The future of the India-US trade relationship will depend on how patient and considerate US remains towards India’s development concerns and the flexibility that India can show within its self-imposed red lines. Any change on trade one can expect is only after November when US goes to polls and Trump coming back to white House for his scond innings.
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