NEW DELHI: India and the US should launch a joint study to determine the feasibility of a trade agreement and the cost-benefit analysis of such a pact, industry chambers and lobby groups have suggested.
In a report on the $500 Billion Roadmap for bilateral trade and business, Confederation of Indian Industry (CII) and the US India Business Council (USIBC) have called for “an FTA (free trade agreement) between India and US that would have wide-ranging ramifications for the domestic industries, and a clear cost-benefit analysis would be needed to gauge its total impact.”
A comprehensive Economic Cooperation Agreement would reduce import duties which could lead to an FTA in future, said the report, and emphasised a comprehensive consultation process, involving dialogue with industry, to examine all facets to “determine the best course of action regarding a formal trade agreement”.
The US has been demanding greater market access in sectors such as medical equipment, dairy, farm products, IT, motorbikes and telecom which India, so far, has found too ambitious to meet. The US has also highlighted its issues with India’s decision to increase import duties on a number of products ranging from consumer electronics and IT to toys and furniture in the Budget 2020-21.
The report, however, added since country-specific tariff cuts are difficult, the only way to avoid market access skirmishes is by negotiating a broad trade agreement.
Outlining the steps needed to boost trade between the two economies, it highlighted policy interventions in 13 specific areas. This includes reinstating the Generalised System of Preferences benefits by the US for India, removing import duties on high-end motorcycles, consensus on a pricing mechanism for medical devices, modifications in India’s e-commerce policy, removing high tariffs on steel and aluminium imports by the US, among others.
CII and the USIBC also suggested India to consider instituting a mechanism of automatic approval in case of clearances and No-Objection Certificates.