India, US spar over trade policy but hopeful of deal

US commerce secretary Wilbur Ross and India’s trade minister Piyush Goyal held out hope of a trade deal between the two countries, but sparred over India’s new e-commerce policy.

Speaking at the India Economic Summit organised by the World Economic Forum, Ross, however, said neither country had said a trade deal will be signed in “5 minutes”. He was referring to expectations that US President Donald Trump and Prime Minister Narendra Modi could announce a limited trade deal during their meetings either in Houston or in New York last month.

“Pre-election, there was undoubtedly some constraints on India to deal with certain matters. Now that the election has come and gone and Prime Minister Modi has a very clear strong position in Parliament, it should be a lot easier to take decisive action,” Ross said.

Goyal said that atrade deal has to keep in mind local factors and multilateral commitments. “On certain issues, there can be a difference of opinion between the two countries,” he added.

Watch: ‘After Howdy Modi, expect big India-US trade deal soon’ I HT Conversations

Despite the obvious bonhomie between Trump and Modi, India-US trade relations have been fraught of late, especially after Washington withdrew zero-duty benefits to Indian exporters worth $6 billion, and New Delhi responded with retaliatory tariffs on 29 products imported from the US.

The limited or interim trade agreement is expected to cover tariff-related concessions for US farm products , pricing of pharmaceutical products such as stents and knee implants, and information and communication technology products in return for restoration of duty-free benefits for Indian exporters.

The US administration and companies say some of India’s regulatory changes in recent years favour domestic firms over foreign ones, and have soured investment plans of American companies.

In February, India’s new investment rules for the e-commerce sector jolted Amazon.com Inc and Walmart’s Flipkart as the companies were forced to change their business structures to continue to operate in the country.

The rules were aimed at protecting India’s brick-and-mortar retailers by deterring big online retailers from giving steep discounts to attract shoppers.

Goyal defended India’s decision, reiterating that the government cannot let “small traders die” and that he had urged e-commerce companies to follow all the rules.

In an interview with Reuters, Ross said the rules had slowed the expansion of Amazon and Walmart in India, calling it an “unfortunate consequence”. He defended the e-commerce companies after Goyal’s remarks.

“Amazon and the other e-commerce companies didn’t get to be the world’s biggest by any evil mechanism. They got there because they are extremely efficient,” Ross said.

The US has been highlighting its rather minuscule trade deficit of $16.9 billion with India, stressing it as much as the country does about its trade deficit of $419 billion with China, which has resulted in a trade war.

The US commerce secretary clarified that the Trump administration is concerned about the trade deficit relating to artificial and protectionist barriers. Ross said while he is aware of the difference in degree of the trade deficit the US has with China and India, it does not mean the US should not be dealing with unfair practices with other countries even if they result in smaller trade deficits.

“Most of the things we are requesting from India would not only help US, a lot of these would also help India itself. India for example has a wonderful opportunity right now to take advantage of trade dissension elsewhere,” he added.

Ross said that in his closed-door bilateral meeting with minister Goyal, he would share a chart on the areas where China is a big exporter to the US and the possible ways India can take advantage of it in changing that mixture.

“We are not just focusing on deficit. We are focusing also on total trade,” he added.

Quoting media reports, Ross said Amazon was planning to invest one-third of what it invested a year before in capex in India this year.

“They probably would have spent a lot more in India if it did not feel that there is a reduction of growth because of some of those policies,” he said.

“All that we are looking for is to level the playing field,” Ross said in the interview with Reuters.

(With inputs from Reuters)

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