Indo-US trade talks may not yield immediate results
The much-hyped trade talks between India and the US ‘eventually’ expected to result in a ‘very big deal’ looks unlikely to yield any early harvests during President Donald Trump’s 36-hour whirlwind trip starting next Monday, much to the embarrassment of both Indian and American negotiators who have been scurrying around trying to achieve just that.
Though they say high-level talks on trade will be held, given that the president will be accompanied by his commerce secretary, it is now an almost given that nothing substantive can be expected currently.
The problem in arriving at a deal, big or small, lies in the nature of the relationship between the two nations and the way they go about the negotiation.
Firstly, we must understand that the US can afford to dictate terms to India as its economic muscle is far greater and our ability to retaliate is limited.
The US is one of the few large markets in the world where India sells more than it buys. In 2019, India did a two-way trade in goods worth $92.1 billion and had a trade surplus of $23.3 billion.
The Americans have already tightened the screws on India by scrapping the GSP which gave a range of Indian goods duty-free access to the US market. Tightening of visa norms for software experts who are shipped by Indian giants like TCS and Wipro would mean more pain for India’s tech industry.
Secondly, India’s trade bureaucracy continues to retain a protectionist, conventional mindset, unable to comprehend that opening up trade may actually expand markets and legitimate tools other than taxes are available in trade pacts to protect the home industry.
For instance, the US wants India to buy their milk and milk products. Indians fear this would hit its dairy industry.
They have said no, citing Indian cultural sensitivities which may see consumers shunning American milk from bovines fed on non-vegetarian meals.
A simpler way out would have been to allow these products entry with labelling rules to make disclosures of ingredients including meals fed to the bovines. The rest could have been left to the Indian consumer’s sensitivity.