[Editorial Analysis] Breaking the ice

Mains Paper 3: Economy
Prelims level: U.S.-India Trade Policy Forum
Mains level: Potentiality of India-US trade


• On her maiden visit to Asia, U.S. Trade Representative Katherine Tai held bilateral meetings with Commerce and Industry Minister Piyush Goyal and relaunched the U.S.-India Trade Policy Forum (TPF).

Challenges in the recent times:

• Raised import tariffs and the withdrawal of benefits to Indian exporters under the U.S.’s Generalized System of Preferences (GSP) which triggered retaliatory trade barbs.

• That marquee American businesses (Harley-Davidson and Ford) have left India has not helped optics, even if their motivations may not have been solely linked to difficult trade norms.

• Joe Biden administration shutting the door on new trade pacts and being cold to restoring the GSP status.

Outcomes of the Meet:

• Revival of a mechanism – an opportunity: This in itself is significant. The TPF was last convened — from machinations towards a free-trade agreement (FTA) to the failure to even reach a mini-trade deal towards the latter half of the Donald Trump administration days. This, she has said, could be considered, while nudging India to set targets for tariff reductions and easing market access across sectors.

• The TPF statement also outlines the sectors and goods and services that need quick attention.

• Future possibilities of tariff reduction: Forum resolved to take economic ties between the two countries to the ‘next high level’ and exchanged views on ‘potential targeted tariff reductions’.

• Re-energize working group in different sectors: The two sides decided to activate working groups of the Trade Policy Forum (TPF) on agriculture, non-agriculture goods, services, investment, and intellectual property to meet frequently and address issues of mutual concern in a mutually beneficial manner. The idea is to deliver tangible benefits to farmers and businesses of both countries by resolving outstanding market access issues.

• ‘Restore GSP benefits’: The Indian side has sought restoration of the GSP (Generalized System of Preferences) benefits by the U.S. and said this would help industries from both sides in integrating their supply chain efficiently. The United States noted it ‘for suitable consideration’.

• Social Security Totalization agreement: The Forum also agreed on the significance of negotiating a Social Security Totalization Agreement in the interest of workers from both sides, and pursuing further engagements for reaching such an agreement.


• Reversal of past misgivings: Whatever misgivings may have existed at the beginning of the Biden administration, Ms. Tai’s visit, that follows trips by key U.S. Secretaries, indicates U.S. interest in engaging with India in significant spheres.

• It looks at India as a key partner in rebuilding critical supply chains in a post-pandemic world seeking to cut its dependence on China, is clear from its desire for integration in areas such as health, medical devices and pharma.

• Boosting Indian Industry: For example, India’s pharma exports account for 40% of the U.S.’s generic drugs supply and Ms. Tai has assuaged its concerns about delays in U.S. regulatory inspections of pharma units.

Challenges for the future (some pointed out by Ms Tai):

• Indo-U.S. trade never really lives up to its potential.

• India’s unpredictable regulatory shifts,

• Tariff- and non-tariff barriers

Way forward:

• Removing barriers: Spur a more open approach towards a market. India must pro-actively steer away from the protectionism that is leading the globalised world adrift.

• Building supply chains: India must seize this fresh initiative with the U.S. to cement its place in the new supply chains being envisaged.


Prelims Questions:

Q.1) With reference to the Rashtra Raksha Samparpan Parv, consider the following statements:

1. Light Combat Helicopter (LCH) is designed and developed by DRDO.

2. The Prime Minister started the National programme of Simulation Training for NCC cadets with the aim to scale up simulation training facilities for all the three wings of NCC.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer: B

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