When US President Donald Trump meets Prime Minister Narendra Modi in New Delhi on Tuesday, an ambitious trade deal in future will be top of the agenda for the two leaders.
Some of Delhi’s decisions in the last few months have contributed to Trump’s frustration that India has not been treating the US well. One such decision was the retaliatory tariffs on walnuts, imposed in the wake of the US withdrawal of the Generalized System of Preferences (GSP). Since India is a huge market for California walnuts, the fate of about 35 consignments was jeopardised — the announcements came while these consignments were on their way.
This is one example of India’s unpredictable tax regime which has bothered Washington, and has now snowballed into a major talking point for the US President.
While the Indian side was happy to conclude a “limited trade deal”, the US had a more “ambitious” deal in mind. This has led to conflict between negotiators from both sides. Although the US Trade Representative is not part of the delegation, he has had at least three meetings or conversations with his counterpart, Commerce Minister Piyush Goyal, but the issues have remained unresolved.
For the Indians, one of the principal demands has been restoration of GSP, and it has been conveyed by Indian negotiators quite clearly. But the American side has put demands in some sectors, like medical devices and dairy products, and Delhi is said to have vacillated.
Now, Washington, which has concluded trade pacts with China, Canada, Mexico, Japan and South Korea in the last two years, is looking to conclude a deal with Delhi as well. While the big trade deal is not taking place this time, the Indian side wants to be a FTA partner with the US in the long-term.
Among the outcomes, a centre for counter-terrorism is likely to be announced as the MoU on Homeland security will focus on aviation and immigration security. Sources said an Industrial Security Annex summit is scheduled for April-May while an energy dialogue to diversify India’s energy requirement will be a key thrust area for discussion around the visit.
That dialogue, also likely to be in April in the US, envisages long-term agreements in energy partnership in LNG and crude oil, a gas task force and technology tie-ups in processing, exploration and exploitation; and the supply of 10 million tonnes of high-grade metallurgical coal, worth about USD 2 billion, used for specialised processes like smelting. A pact between Indian Oil and Exxon on the LNG pipeline infrastructure is likely to be inked during the visit.
The areas where agreements are likely include building capacities and collaborations in mental health; industry-specific agreements for the supply of high-quality medicine to the US; agreement on intellectual property rights and a basket of items in defence, which is likely to include helicopters. An agreement on space is also on the table.
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In what could turn out to be a major outcome in India-US defence cooperation, New Delhi and Washington are likely to move forward on negotiations for the final foundational agreement — the Basic Exchange and Cooperation Agreement (BECA). Trump and Modi are expected to discuss fast-tracking the pact and moving on it as early as in March. Officials from the Ministry of Defence and the Pentagon are expected to get together to expedite the negotiations.
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