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Trade deal between India and US fails over tariffs on ICT products

Modi and Trump at UN General Assembly
Source: Marendra Modi/Twitter

India’s refusal to remove the 20% tariffs on Information and Communication Technologies’ (ICT) products has reportedly caused the trade deal between India and USA to fall through, The Hindu reported. India is concerned that removing these tariffs could open up the market to a flood of Chinese products, the report said. A bilateral trade deal was expected to be announced on the sidelines of the UN General Assembly meeting on September 25. However, after the meeting, President Trump said, “I think very soon we will have a trade deal. We will have a larger deal later on.”

Was this deal expected? Numerous media reports had hinted at the announcement of this deal, either at the Howdy Modi event in Houston, or at the sidelines of the UN GA meeting.

Who were involved in the negotiations? Indian Commerce and Industry Minister Piyush Goyal, and US Trade Representative Robert Lighthizer

What did India want?

  • Reinstatement of preferential market access to American markets under the Generalised System of Preferences (GSP) program that USA had revoked in early June.
  • Facilitation of processes in agricultural product markets where it already had access (easier certification of food product irradiation facilities)
  • Greater access in some agricultural markets (grapes, pomegranates)

What did the US want? Apart from removal of tariffs on ICT products and smartphones, Washington wanted:

  • Greater access to Indian markets for medical devices (stents and knee implants) and dairy products
  • Removal of price caps (Trade Margin Rationalisation or TMR) on medical devices
  • Scrap tariffs on motorcycles (50%), automobiles (60%), and alcoholic beverages (150%)

Other issues for consideration:

  • US wants relaxed regulations around data localisation and FDI in e-commerce
  • India wants to be taken off US’ “Priority Watch List” which identifies countries that pose challenges to American IPR.

Could these issues be discussed again? Potentially, given that MeitY is organising an ICT Working Group meeting between the two countries on September 30 and October 1.

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