A United States report has said that the Indian government’s emphasis on import substitution through its “Make in India” initiative has “epitomised the challenges” in bilateral trade relationship. The report also called India’s policies “trade-restrictive”.
In its “2021 Trade Policy Agenda and 2020 Annual Report” submitted to US Congress on Monday, the United States trade representative said that America tried to resolve the “long-standing market access impediments affecting US exporters” with India during 2020.
“While India’s large market, economic growth, and progress towards development make it an essential market for many US exporters, a general and consistent trend of trade-restrictive policies have inhibited the potential of the bilateral trade relationship,” the report said. “Recent Indian emphasis on import substitution through a ‘Make in India’ campaign has epitomized the challenges facing the bilateral trade relationship.”
The report said that the former Donald Trump administration suspended India’s eligibility under the Generalized System of Preferences after a review following concerns of New Delhi’s compliance with the programme’s market access criterion. Under the Generalized System of Preferences, or GSP, programme, certain products can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by its Congress.
Trump had in March last year announced his decision to terminate the GSP programme, saying that New Delhi has not assured the US that it will provide equitable and reasonable access to the markets of India.
In its report, the Joe Biden administration said following the suspension of the GSPO benefits, India and the US worked towards creating a package and this continued through 2020. “US objectives in this negotiation included resolution of various non-tariff barriers, targeted reduction of certain Indian tariffs, and other market access improvements,” it said.
“The United States also engaged with India on an ongoing basis throughout 2020 in response to specific concerns affecting the full range of pressing bilateral trade issues, including intellectual property protection and enforcement, policy development affecting electronic commerce and digital trade, and market access for agricultural and non-agricultural goods and services.”— 2021 Trade Policy Agenda and 2020 Annual Report
The matters raised in the report remained unresolved till the end of the Trump administration. India had called the termination of the GSP programme “unfortunate”, hoping that it was part of a regular process that “gets resolved mutually from time to time”.
At that time, India was the biggest beneficiary of the GSP programme which allowed for $5.6 billion (approximately Rs 3,896 crore), worth of Indian exports to enter the country duty-free. Further, according to the US Trade Representative’s Office, the US goods and services trade deficit with India was $27.3 billion, or over 2 lakh crore, in 2017.
Trump had repeatedly called to reduce US trade deficits and protested against India’s high tariffs. He had first brought up the matter soon after taking office, during his inaugural address to a joint sitting of the US Congress in 2017, without directly naming India.