The annual reports of US Trade Representative stated that India’s recent emphasis on import substitution through the ‘Make in India’ campaign is one the several challenges facing the bilateral trade relationship.
- India and USA Bilateral Trade
- In 2019-20, the bilateral trade stood at $88.75 billion.
- The United States of America is one of the few countries with which India has a trade surplus.
- India’s trade surplus with the United States increased to $17.42 billion in 2019-20 from $16.86 billion in 2018-19.
- For the United States of America, India was the 6th largest supplier of services imports.
- India’s large market, economic growth, and progress towards development make it an essential market for US exporters.
- Issues in the Trade Relationship
- Tariffs: Both India and USA cite market barriers including both tariff and non-tariff barriers, as well as multiple practices and regulations that disadvantage foreign companies.
- GSP Programme: Effective from June 2019, the USA decided to withdraw duty-free benefits to Indian exporters under the GSP (Generalised System of Preferences) programme.
- Services: A key issue for India is the USA’s temporary visa policies, which affect Indian nationals working in the USA.
- India also continues to seek a “totalization agreement” to coordinate social security protection for workers who split their careers between the two countries.
- Agriculture: Sanitary and phytosanitary barriers in India limit USA agricultural exports.
- Each side also sees the other’s agricultural support programs as market-distorting.
- Intellectual Property: Both sides differ on how to balance IP protection to incentivize innovation and support other policy goals, such as access to medicines.
- India remains on the “Special 301” Priority Watch List for 2020, based on concerns owing to its treatment of patents, infringement rates, and protection of trade secrets.
- “Forced” Localization: The USA continues to press India on its “forced” localization practices.
- Initiatives to grow India’s manufacturing base and support jobs include requirements for in-country data storage, domestic content (such as laws protecting India’s solar sector), and domestic testing in some sectors.
- India’s new data localization requirements for electronic payment service suppliers such as MasterCard, Visa, etc.
- Investment: USA concerns about investment barriers remain nevertheless, heightened by new Indian restrictions on how e-commerce platforms such as Amazon and Walmart owned Flipkart conduct business.
- Defense Trade: The USA urges more reforms in India’s defense offsets policy and higher FDI caps in its defense sector.
Generalized System of Preferences
- The Generalized System of Preferences is a United States of America trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.
- Generalized System of Preferences was instituted on 1st January, 1976, by the Trade Act, 1974.
- There is a huge potential to boost bilateral trade between India and USA especially on account of increasing anti-China sentiment in both the countries.
- Thus, the negotiation should focus on the resolution of various non-tariff barriers and other market access improvements as early as possible.
Make in India campaign impact on India-US Bilateral Trade Make in India campaign impact on India-US Bilateral Trade