India and the US failed to arrive at a limited trade deal during Indian PM visit to the U.S.
What is the expected “limited” trade deal?
The trade deal was faltered over duties imposed by India on ICT products.
The U.S. wanted the 20% duty on mobile phones and ethernet switches to be reduced or eliminated.
U.S. also demanded greater access to the Indian market for medical devices such as stents and knee implants apart from its dairy and agricultural products.
For its part, India wanted the Generalised System of Preferences which gives preferential market access for its products in the U.S., restored.
Why the trade deal couldn’t be finalised?
India - U.S’s demands in medical devices and dairy & agricultural products are seen as sensitive products politically for the India.
As the government has often taken credit for making those products affordable.
Loosening price controls now is not an option for India as that would push up prices of these products in the country.
Afull-scale trade agreement would pose bigger challenges on issues such as intellectual property, e-commerce and H1B visas.
With its economy in the grip of a major slowdown, any concessions from India on imports of American products may not have gone down well both politically and in economic terms.
U.S. - For U.S. President Trump, even a limited deal with India will be something to talk about as he approaches election year.
This is especially because trade talks with Chinaare going nowhere.
China has not only taken punitive tariffs by the U.S but also retaliated by picking the products that could hurt Trump’s constituency and supporters.
This explains the hectic, behind-the-scenes activity with India in the last few weeks.
Going by the limited information in the public domain, it appears that India has played tough and refused to yield to U.S. demands.
Trade negotiations are never easy and for them to succeed, both sides have to believe in a policy of give and take.
It does not help if one side tries to bulldoze the other into submitting totally to its interests.
At this point in time it does seem that even a limited trade deal between India and the U.S. is some distance away.
