India and the US restart trade talks

India and the US restart trade talks

12/07/19

Chern Han Mah, Business and Policy Intern

Assistant US Trade Representative for South and Central Asia, Christopher Wilson, has restarted talks with Indian officials ahead of a meeting with Commerce Minister Piyush Goyal on 12 July. Issues relating to data localisation and Indian retail policies are among the thorny issues that both sides have to address.

The resumption of talks come as a result of US President Donald Trump and Indian Prime Minister Narendra Modi’s meeting at the sidelines of the G20 Summit in June 2019. Previous talks had stalled after India imposed tariffs on nearly 30 American goods. The US retaliated by removing India from a list of countries that received duty free access for up to US$6.3 billion worth of Indian exports to the US.

India is expected to emphasise efforts to correct the existing trade balance with the US – a point of contention for the Trump administration – after data showed that the India’s trade surplus fell to US$17.12 billion from US$21.26 billion a year ago. An Indian Foreign Ministry spokesman said that it would aim to make decisions that would improve relations, noting that the bigger picture is one of increasing bilateral trade – predicted to reach up to US$238billion by 2025.

Washington is expected to seek revisions to foreign investment rules and possibly push for a free trade agreement, which Modi is concerned will reduce India’s competitiveness, lead to a large increase in imports, and hurt his “Made in India” policy programme.

The tentative restarting of trade talks is another example of the Trump administration seeking bilateral talks with nations on reducing the US trade deficit, having first imposed protectionist policies on them – a major contributing factor to the uncertain global trade environment.