US Secretary of Commerce Wilbur Ross along with other members of the country’s delegation in India met with Prime Minister Narendra Modi on Tuesday to discuss issues that have impacted trade between the two countries.
“We just had a meeting this morning with Secretary Ross and others … with the Prime Minister in which we raised all of these issues very clearly and the government understands what our position is,” said Kenneth I Juster, US Ambassador to India, during the Trade Winds Indo-Pacific Business Forum in Delhi.
“We must also recognise that it (India) remains a challenging market. The regulatory and policy environment is complex and often difficult to navigate. We at the US embassy and the US missions throughout this country will continually work with the Indian government to seek to lower barriers to trade and increase market access,” he added.
According to Commerce Minister Suresh Prabhu, trade issues can be “sorted out in a way that benefits both countries.”
“We have a trade surplus with the US,” said Prabhu, adding that, at the same
time, India’s imports of larger products like aircraft from American companies like Boeing could help offset this surplus going forward.
However, the US Commerce Secretary reiterated the US government’s criticism of India’s regulatory and trade policies, which he said have caused an “imbalance” that needs to be counteracted.
American businesses currently face “significant” market access barriers in India, including tariff and non-tariff barriers as well as “multiple practices and regulations that disadvantage foreign companies,” he said.
Despite India is expected to become the world’s largest consumer market by 2030, it is only the US’ 13th largest export market “due to overly restrictive market access barriers,” said Ross.
“Meanwhile, the US is India’s largest export market, accounting for something like 20 per cent of the total. There is a real imbalance,” he said.
Even while US exports of goods to India last year increased by 29 per cent to $33 billion, the “problem” is that the US’ imports from India had also increased over 10 per cent to $54 billion, representing a trade deficit of $21 billion in goods, said the US Commerce Secretary.
The US also had a trade deficit of $3 billion with India in the services sector last year, largely due to India’s “very strong” capability in IT services, according to him.
Ross specifically mentioned India’s average applied tariff rate (13.8 per cent), its tariff on automobiles (60 per cent), motorcycles (50 per cent), alcoholic beverages (150 per cent) and its bound tariff rates on agricultural products, which he said were as high as 300 per cent in some cases.
“These are not justified percentages. They are way too high,” Ross said.
“Our goal is to eliminate barriers to US companies, operating here, including data-localisation restrictions that actually weaken data security and increase the cost of doing business,” he added.
Other obstacles include price controls on medical devices and pharmaceuticals, and restrictive tariffs on electronics and telecommunications products, he said.