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‘Frictions & frustrations’ limit full potential of US-India trade ties — envoy Kenneth Juster

US Ambassador to India Kenneth Juster, whose tenure ends this month, highlights issues of growing market access restrictions, increasing tariffs, limitations on free flow of data.

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New Delhi: Outgoing US Ambassador to India Kenneth I. Juster Tuesday said there were “frictions and frustrations” in the two-way trade and investment ties with India during his tenure, with the countries failing to sign a “small” trade agreement.

Juster, who came to India as the US envoy in 2017, said the main reason for the bilateral trading relationship not achieving full potential was the “growing restrictions” on US goods’ access to markets in India.

“We need to apply the same level of ambition in the economic sphere that we have had in the diplomatic and defence fields … There are also frictions and frustrations on the trade and investment front,” said Juster, whose tenure ends this month, in his farewell speech to the ORF.

He added, “Despite persistent efforts, we were unable to conclude even a small trade package.”

There are “growing restrictions in India on market access for certain US goods and services, increasing tariffs, new limitations on free flow of data and a less than predictable regulatory environment for investors”, he said.

“Given the size of our respective markets, there is plenty of room to expand the flow of goods and services in both directions in order for us to reach the full potential of our economic relationship.”

In 2019, bilateral trade in goods and services had surged to $146.1 billion, up from $18.6 billion in two-way trade in 2001, Juster said.

He added that 16 per cent of India’s total exports head to the US and that India is the 12th largest trade partner of the US.

In terms of investments, while US companies have continued to invest and expand in the country, Indian firms have also been expanding their operations in America.

Juster further said US companies have contributed five million jobs to the Indian economy.

“No other country contributes as much to job creation, consumer choice, technology diffusion and economic improvement for Indians.”

Also read: India has been a ‘troublesome’ partner for S, says trade representative Robert Lighthizer

India needs to take further action

With the US and other companies looking to move away from Chinese supply chains and explore alternative manufacturing sites, India should grab the opportunity, Juster said.

“As US and other companies find it increasingly difficult to operate in China or seek to diversify away from Chinese-led supply chains, India has a strategic opportunity to become an alternative destination for manufacturing in the Indo-Pacific,” he said.

However, to “fully seize the opportunity, the Indian government may well need to take further action”.

On the government’s stress of an ‘Atmanirbhar Bharat’ (self-reliant India), Juster said this should help the country become a part of the global value chains and not give rise to more barriers to trade.

“It remains to be seen that all these policies are compatible and mutually reinforcing or whether they will lead to higher tariff and non-tariff barriers to trade. The latter would limit India’s capacity to truly integrate into global value chains, and, in the process, raise a crisis for Indian consumers,” he said.

Also read: India needs policy ‘predictability’ to be an alternative to China: US-India trade body


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