India and the US won’t immediately escalate vexed trade-related issues and are expected to hold their position on all important matters till a new government is formed in New Delhi by the month-end, officials with knowledge of the matter said on Tuesday.
US commerce secretary Wilbur Ross too hinted the two sides will maintain their positions in his speech at the Trade Winds business forum, while raising the issue of trade imbalance with India.
“We applaud India’s commitment to addressing some of these barriers once the government is reformed, probably starting in the month of June,” he said.
Election-bound India is expected to form a new government before the tenure of the current Lok Sabha ends on June 3.
India’s main concerns include the US decision to enforce sanctions on oil imports from Iran, one of the country’s main energy suppliers, and the withdrawal of benefits under the Generalized System of Preferences (GSP) programme.
Washington is concerned by the trade imbalance because of tariff and non-tariff barriers, and regulations that US officials say put foreign companies at a disadvantage.
According to the officials cited above, India has explained to the US that strategic matters, including trade-related issues, can be effectively dealt with after the new government is formed.
They added the US has hinted it might make a final decision on withdrawing incentives under GSP after the new government is formed.
The two sides are also locked in disputes over Indian price caps on imported US medical devices, and e-commerce rules barring companies from selling products through firms in which they have an equity interest.
Ross contended India’s push to get foreign firms to store more of their user data locally is a hindrance to trade, and said India’s treatment of Walmart after its acquisition of Flipkart was an “important issue”.
“So the American companies are showing very good will and a very cooperative attitude towards ‘Make in India’ and the other programmes,” Ross told CNBC-TV18. “But there’s a limit to how far the discriminatory behaviour can go.”
Commerce minister Suresh Prabhu said he had “an excellent” meeting with Ross on Monday, during which they discussed “how to take this relationship to the next level”.
Prabhu expanded US President Donald Trump’s slogan “Make America great again” to “Let’s make America great again by making India-US relationship far better again”. Ross rephrased it to “MAGAWIC”, or “Make America great again with Indian cooperation”.
Ross told the business forum US technologies and expertise can play a key role in developing India’s economy but faced “significant market access barriers”. Noting that India is the third largest economy and would become the largest consumer market by 2030, he added: “Yet today, India is only the US’ 13th largest export market due to overly restrictive market access barriers.”
On the other hand, the US is India’s largest export market, accounting for about 20% of the total. “That’s a real imbalance, and it’s an imbalance we must drive to counter,” he said.
He contended India’s average applied tariff rate of 13.8% is the highest of any major world economy and its “bound tariff rates”, or the highest rate that can be charged, on agricultural products ranged from 113.5% to 300%.
Ross referred to Trump’s vision of a free, open and prosperous Indo-Pacific and said India is key to the US administration’s approach to the region.