They see the possible restoration of the Generalised System of Preferences (GSP) scheme as an early confidence-building measure to resolve sticking points, leading to an eventual trade deal. This had been withdrawn by the Donald Trump administration in 2019.
The two countries have been working on an initial trade deal for almost two years amid a plethora of contentious bilateral issues ranging from medical devices, agriculture, Harley-Davidson motorbikes, ecommerce, the totalisation pact, visa issues and disputes at the World Trade Organization.
“We are yet not ready to go for a trade agreement,” said Arpita Mukherjee, professor at the Indian Council for Research on International Economic Relations (Icrier). “We will need at least two more years to prepare our regulatory regimes and other reforms.”
India has sought 100% restoration of benefits under the GSP scheme and duty concessions for mangoes, pomegranates and grapes. The farm sector is of equal interest to the US and it has sought lower duties for apples, pecan nuts, walnuts, almonds and soya bean. India has also demanded exemption from high duties imposed by the US on certain steel and aluminium products. The US wants market access for medical devices and lower duties for certain ICT (information and communications technology) products, poultry and various dairy products including milk powder.
“While the broad contours of the FTA will remain the same, the two countries will have to sit on the drawing board again to see where is the headroom to move forward, in the spirit of conciliation and not confrontation,” said Biswajit Dhar, professor of economics at Jawaharlal Nehru University (JNU).
In April-August, the US was India’s second largest trading partner at $26.5 billion after China at $30.5 billion. It was the largest trading partner in FY19 and FY20.India, however, had a $7 billion trade surplus in the period, when it had a deficit of $12.6 billion with China.
India stands to gain when it comes to the likely softening of the US stand on Iran under the new president, experts said.
New Delhi has had to restrict its trade with Iran because of the Trump administration’s animosity toward Tehran. “Joe Biden is less unpredictable and less whimsical and believes in institutions. It is expected that he will soften the US stand on Iran and that would greatly benefit India’s trade,” said Ajay Sahai, director general of the Federation of Indian Export Organisations, adding that this will give India an alternate energy source. “At the same time we will be able to diversify our exports to Iran.”
The industry hopes a Biden administration will honour the $500 billion bilateral trade target set under Barack Obama. Currently, goods and services trade between stands at over $150 billion.