India and the United States may negotiate on bilateral trade tussle and limited trade deal during US President Donald Trump’s two-day visit starting Monday. And despite differences, data show that India and the US are expanding bilateral trade.
US trade with the world went down more than one per cent in 2019 compared to last year. At the same time, the total value of Indo-US trade has reached $92.08 billion, which is more than 5 per cent from 2018. India maintained its position of the 9th most significant trading partner of the US in 2019 with a $23.3 billion surplus.
The largest share of this growing trade with the US is of crude oil. India imports $5.64 billion worth crude from the US, which is becoming one of our major oil suppliers.
After complying with US sanctions on Iran, India has ceased crude oil import from the Gulf country June, 2019, onwards. At the same time, US crude supply has jumped 96 per cent in a year, data show. India imported 87 per cent more oil in 2019 over $5.64 billion last year.
According to US Census Bureau data, India imported $34.41 billion worth goods from the US in 2019 and exported goods such as medicines, diamond and jewellery worth $57.67 billion.
But with rise in bilateral trade, tussle has also widened. The US Generalized System of Preferences (GSP) is one such issue, which is expected to be a focal point of Trump’s visit. GSP is a unique tariff-free trade tool to provide incentives to favourable trading partner.
On June 5, 2019, the US removed India from its privilege list, accusing it of not providing requisite market access. In 2018, India was one of the largest beneficiaries of this facility. The US has also been criticising India over tariff-related issues for several years.
US policymakers have accused India of having higher tariff rates, especially on agricultural products. The latest US Congressional research note said that the “Trump administration has criticised India for a range of unfair trading practices”.
Trump has made it clear that there will be no significant trade deal during his visit, but experts suggest that a limited trade deal could be possible. The US may reintroduce India in the privilege list under GSP if it allows more market access.