India-US trade policy
02 Feb 2024 3 mins Download PDF
Context: India and the US are set to take up a number of sticky trade issues at the trade policy forum meet that begins today (January 12).
Importance of Trade Policy Forum Meeting:
- The US is India's largest trade partner, and India heavily relies on US demand for export earnings.
- India aims to benefit from the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) to counter China's influence in the region.
- Closer trade ties with the US can attract more Foreign Direct Investment (FDI) amid the ongoing supply chain reset.
- The meeting provides a platform to resolve trade tensions and seek export growth in the absence of a free trade agreement (FTA).
Restoration of GSP as a Key Demand:
- GSP benefits were lost in 2019 due to Trump's trade measures, impacting India's $5.7 billion imports into the US.
- Despite expectations, GSP restoration has not occurred under the Biden administration.
- The demand for GSP restoration is crucial for Indian exporters to regain duty-free status and boost trade.
US Concerns about India's Laptop Import Monitoring System:
- The US questions India's proposed laptop import monitoring system, considering it a non-tariff measure.
- India clarifies its intention to ensure IT products come from "trusted geographies."
- This concern is likely to be discussed during the trade policy meeting.
Boosting Service Trade with the US:
- India seeks a liberal visa regime to enhance service trade, addressing concerns over visa delays during the pandemic.
- Services exports to the US have contributed to lowering India's current account deficit.
Totalisation Agreement Demand:
- India reiterates the demand for a totalisation agreement to provide social security to Indian professionals in the US.
- The agreement aims to eliminate dual social security deductions and benefit the Indian IT sector workforce.
- India has provided the US with necessary data about social security schemes for the proposed agreement.
Generalized System of Preferences
- It stands as the oldest and largest trade preference program in the United States.
- Its primary objective is to encourage economic development by granting duty-free entry or reduced Most Favored Nations (MFN) tariffs for numerous products from specified beneficiary countries.
- This program operates as an overarching framework encompassing the majority of preferential schemes extended by developed nations to those in the process of development.
- Essentially, it facilitates the duty-free access or reduced tariffs for eligible products exported by beneficiary countries to the markets of donor countries.
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