New Delhi: India and the US will have an opportunity to iron out key differences in reaching a limited bilateral trade agreement during US President Donald Trump’s upcoming visit to India.
Trade experts said that the US and India have resumed trade negotiations for a limited or mini-bilateral trade agreement, which includes greater access to Indian and American companies in each other’s markets.
The US President will be on his maiden India trip from February 24-26. He will travel to New Delhi, Ahmedabad and Agra.
The agreement has become crucial for India since the country has withdrawn itself from RCEP negotiations.
Besides, economy watchers said that a smooth trade relation with the US might give a boost to exports, which in theory should lift India out of its Stagflation phase.
Stagflation is an economic trend marked by rising inflation and falling GDP growth.
Recently, the February 2020 report of Moody’s Investors Service’s Global Trade Monitor said “the US and India could finalise a limited bilateral trade agreement” during the current month.
Commenting on the prospects of a mini trade deal, Edelweiss Securities’ Economist Madhavi Arora said that though the US share in India’s exports has halved since 2005, it is still a significant player in the country’s export pie.
“The US is still the only outlier developed market which is growing at this point of time. So it is important to ensure that our pie in global and US exports does not shrink further,” she said.
M. Govinda Rao, Chief Economic Advisor, Brickwork Ratings, said: “The approval of the sale of the Integrated Air Defence Weapon System leaves room for strategic cooperation and agreement to export strategic weapons to India from the US. Wider cooperation and agreement in trading of goods and services is still a work in progress.”
However, the cancellation of US Trade Representative (USTR) Robert Lighthizer’s proposed trip to India has slightly subdued the prospects of reaching an agreement during the US President’s visit.
“The decision to cancel the visit by Robert Lighthizer to India ahead of President Trump’s visit is not very encouraging. Trump’s visit may open up vistas for greater cooperation,” Rao said.
On its part, EEPC India said that it will welcome any form of trade agreement and hoped that the duty hike on steel and aluminium products from India will be reversed.
At present, the bilateral relationship is facing headwinds of trade disputes.
In 2018, the US went against India at the WTO, alleging that New Delhi was subsidising exports.
The US has also rolled back the export benefits for over 1,900 items under its generalized system of preference (GSP) program.
“The proposed trade deal may lead to the reinstatement of the GSP benefits and greater access of Indian steel, aluminium, automotive and engineering products to the US market,” said Suman Chowdhury, President, Acuite Ratings & Research.