Trade biggest point of latest friction in India-US business ties

NEW DELHI: The recent few years might have seen a steady drift towards closer Indo-US ties, but trade has rapidly become one of the major points of contention between the global superpower and the Asian economic powerhouse. The past few weeks have seen the US turn the heat higher, pulling up India before the World Trade Organisation and challenging certain of its export schemes.

The move followed repeated statements from US president Donald Trump on the disparity in tax structure for Indian imports to the US and US imports to India. Trump has consistently cited the high import duties placed by India on US-made motorcycles like Harley Davidson as an example. 

While India has dismissed notions of a trade war with the US, on Saturday morning, PTI reported that a senior White House source had stated that trade had become the point of “most friction” in Indo-US relations. 

“The commitment to the relationship is very strong on both sides. If you had to point to a part of the relationship where you have the most friction, it certainly would be the trade side,” the official had said on condition of anonymity. The White house official has gone on to add however, that one of the larger pain points from the US’ side -- the skewed trade deficit with India -- is improving. 

This view is shared in India’s export community too, with Ajay Sahai, president of the Federation of Indian Export Organisations (FIEO) telling The New Indian Express after US challenge at the WTO that “the trade deficit between India and the US is already narrowing. This trend is only set to accelerate with the start of oil and gas shipments from the US to India”. In 2016, the United States ran a $30.8 billion trade deficit with India in goods and services.

However, foreign policy analysts say that Trump’s language as far as Indo-US trade is concerned has concentrated more on the tariff structure than the trade deficit. In fact, after Trump’s controversial announcement of steel and aluminium import tariffs, the US President made special mention of both India and China’s tariffs -- threatening reciprocal taxes. 

“We’re going to be doing a reciprocal tax programme, at some point so that if China is going to charge us 25 per cent or if India is going to charge us 75 per cent and we charge them nothing...” Trump had tweeted, going on to add “they are 50, they are 75 or they are 25, we are going to be doing the same numbers. It’s called reciprocal. It’s a mirror of tags. So they charge us 50, we would charge them 50”. 

The line that Trump has taken on reciprocal taxes has been reiterated by the quoted White House official. 

“This administration is looking for a free, fair and reciprocal trade with India. And so is seeking to see some of those tariffs such as on a Harley Davidson motorcycles that are there. US is determined to find the opportunities to increase trade investment with India and does expect that there will be some sort of reciprocal dealings on the trade issues,” the official had said.