15th November 2022 (7 Topics)
1
Nov
2
Nov
3
Nov
4
Nov
5
Nov
7
Nov
8
Nov
9
Nov
10
Nov
11
Nov
12
Nov
14
Nov
15
Nov
16
Nov
17
Nov
18
Nov
19
Nov
21
Nov
22
Nov
23
Nov
24
Nov
25
Nov
26
Nov
28
Nov
29
Nov
30
Nov
Mutula Benefits of India-U.S. cooperation on Trade
Context
Recently, the US treasury secretary has highlighted the prospects of strengthening its economic ties with India.
About
Key Point:
- The U.S. wants to minimize its vulnerability to supply-chain disruptions.
- Pursue a strategy of ‘friend shoring’, with India.
- Plan to cut its reliance on countries with geopolitical and security risks.
- To counter China’s dominance in the production of products, e.g., solar panels.
- Mitigate over-concentration on select suppliers.
- Keenness to nurture local partners in developing countries.
Previous Fallouts:
- Withdrawal of duty-free access to Indian exporters:
- In 2019 The US government withdrew its GSP (Generalised System of Preferences) benefits to India.
- The Generalized System of Preferences or the GSP is a preferential tariff system that developed countries extend to developing countries.
GSP (Generalized System of Preferences): It is the largest and oldest US trade preference program, designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
- Putting India on U.S. Treasury’s ‘Monitoring List’ in 2020:
- The list closely monitors the currency practices and policies of some of the US’ major trade partners.
- India has been on the list for about two years over its currency practices.
- But now India has been removed from the United States Currency Monitoring List.
|
Currency Manipulator Watch List:
|
India’s Relations with the US:
Economic Relations:
- In 2021, overall U.S.-India bilateral trade in goods and services reached a record USD 157 billion.
- The United States is India’s largest trading partner and most important export market.
- America is one of the few countries with which India has a trade surplus. In 2021-22, India had a trade surplus of USD 32.8 billion with the US.
Bilateral Trade with the US:
- Bilateral trade between the US and India stood at USD 119.42 billion (2021-2022) as against USD 80.51 billion in 2020-21.
- Exports to the US increased to USD 76.11 billion in 2021-22 from USD 51.62 billion in the previous fiscal year, while imports rose to USD 43.31 billion as compared to about USD 29 billion in 2020-21.
Associated Challenges of India-US Ties?
- Tariff Imposition: In 2018, the US imposed a 25% tariff on certain steel products and a 10% tariff on certain aluminum products from India.
- India retaliated in June 2019, by increasing tariffs on 28 products worth about USD 1.2 billion on US imports.
- However, after the imposition of the Section 232 tariffs, steel exports to the US declined by 46% year-on-year.
- Misunderstanding Self-Reliance as Protectionism: The Atmanirbhar Bharat Campaign has exacerbated the view that India is increasingly becoming a protectionist closed market economy.
- Strict enforcement and potential expansion of data localization measures.
- Exemption from the US Generalised System of Preferences: Effective in June 2019, the USA decided to withdraw duty-free benefits to Indian exporters under the GSP program.
- US’ Hostility towards Other Countries: Some of the differences between India and the US are not direct consequences of the India-US relationship but due to US’ hostility towards third countries like Iran and Russia – the traditional allies of India.
- US policy in Afghanistan: India is also concerned over the US policy in Afghanistan as it is jeopardizing India’s security and interest in the region.
International Cooperations:
- India and the United States cooperate closely with multilateral organizations, including the United Nations, G-20, Association of Southeast Asian Nations (ASEAN) Regional Forum, International Monetary Fund, World Bank, and World Trade Organization.
Way Forward
- With India set to take up the reins of the G-20 presidency, New Delhi has a chance to steer the global economic and trade agenda towards greater equity, including on climate change.
- Both sides stand much to gain by enhancing mutual trust and cooperation, particularly on trade.
Courses
Study
Notes
Home
Resources
More
