The election of Donald Trump as US President may bring some level of uncertainty in the Indo-US trade relations due to the conflicting stances he took during the campaigning. While negotiating for a separate bilateral treaty with the US may bring some positives for India, Trump’s focus on protectionism may affect the trade relationship.
“There are two things which has everyone completely confused — first is Trump’s focus on domestic manufacturing to increase local employment and second, his focus on bilateral trade agreement with various countries. If we are able to negotiate a good bilateral trade deal, it may help various sectors of our economy, as there is a lot of scope for improvement. But a protectionist stance by the US may hamper the developments on bilateral front. So this is a paradox,” said Ram Upendra Das, professor, Research and Information System for Developing Countries (RIS).
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Trump has already made statements against the multilateral treaties such as proposed Transatlantic Trade and Investment Partnership (TTIP) and North American Free Trade Agreement (NAFTA). On the other hand, he has said that he would instead re-negotiate bilateral deals that would be more favourable to US manufacturing. NAFTA, which was signed with Canada and Mexico in 1992, has helped Mexico increase its exports to the US significantly. In 2015, $295 billion of goods were exported by Mexico to the US.
The US is India’s number one export destination — it accounted for 15.37 per cent of India’s total export market in 2015-16. While India exported $40.33 billion of goods to US, it imported just $21.81 billion of goods from there.
The top three categories of products exported to US from India were precious stones, textiles and pharmaceutical products. According to experts, if multilateral treaties such as NAFTA, which give major export tariff concessions to other countries like Mexico, are junked by the Trump administration, India may find an opening to increase exports of its textile products to the US.
Indian pharmaceutical companies, which have USA as their primary market, has been facing a lot of heat from the United States Food and Drug Administration (USFDA) in last few years.”Pharma issues are by and large regulatory issues, which are a separate ballgame altogether (that IT visa issues). Even if you have the best of relationship (with any country), and if they think you are sending a substandard product, they will take action,” said Arpita Mukherjee, Professor, Indian Council for Research on International Economic Relations (ICRIER).
As Trump has also advocated junking Obamacare, which was implemented to bring the uninsured Americans under the government healthcare net, it is not clear how it may affect the Indian pharmaceutical companies. “I would not jump on any conclusions as of now but I would say that USA has always had a significant demand for generic drugs (which Indian companies export to US). This demand would not be affected. It would always need a supply chain,” Das said.