Economics Prelims cum Mains

India’s Very High Tariffs “Unacceptable”, Says Trump

The News

  • US will discuss the persistent ‘trade friction’ with India on the sidelines of G20 summit being held in Osaka, Japan. US President Donald Trump has reiterated his stance on India’s ‘high tariffs’ on US exports.
  • Besides, India and US will also be a part of trilateral, JAI (including Japan), to discuss the security situation in Indo-Pacific.


Status Of Trade Between India And US

  • Bilateral trade between India and US reached about $142bn in 2018.
  • US has a trade deficit of $24bn with India.

Image result for india us trade war

Focal Points Of Trade Friction Between India And US

  • Lack of Market Access: US has long complained about the lack of market access especially in agricultural commodities, dairy products, medical devices etc.
  • High Tariffs: Recent Trade Friction
    • US is wary of high tariffs on exports to India especially heavy motorbikes, electronics, mobile phones, auto parts, toys etc
    • In line with America first policy, in 2018, US imposed a tariff hike upto 25% on aluminum and steel imports from India.
    • In reply,India raised tariffs on imports of 29 products from the US, including almonds, apples and phosphoric acid.
  • Withdrawal of GSP
    • The above tariff war resulted in US withdrawal of preferential trade status for India, under Generalised System of Preferences (GSP) programme in March 2019.
    • Under GSP, certain products can enter the US duty-free if the beneficiary is developing country.
  • Digital Economy:
    • India’s draft Personal Data Protection Bill, 2018 requires strong data localization.
    • US has criticised India’s proposed norms on data localisation as ‘most discriminatory’ and ‘trade-distortive’
  • Non-tariff Barriers: US has repeatedly questioned India’s export subsidies at the WTO.
  • Price Control In Medical Implants
    • US has often demanded removal of price control over medical implants such as stents, knee implants etc.
    • The fixing of trade margins for medical devices in India is seen as trade distortive because the trade margins fixed for domestic and global players are different.
  • IPR Issue In Pharma Sector
    • US has criticized India’s IPR regime against ‘ever-greening’ of drugs.
    • However India’s IPR regime is compliant with WTO.

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