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India-US trade deal final, Robert Lighthizer to seal it on February trip to Delhi

India and US, whose relationship has been wracked by deep trade tensions, have managed to iron out ‘last-minute glitches’.

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New Delhi: India and the US have ironed out last-minute glitches to finalise a limited trade package that will address some immediate irritants on both sides, multiple sources told ThePrint. 

According to the sources, New Delhi has agreed to remove price caps from US-imported medical devices, a matter of much concern in the US, while Washington is ready to partially restore concessions for Indian imports under the US’ Generalised System of Preferences (GSP), a trade programme meant to boost the economies of developing nations. 

The final prepping of the deal will take place early next month when US Trade Representative (USTR) Robert Lighthizer comes to India, the sources said. 

This will be Lighthizer’s maiden visit to India since becoming the USTR. He is expected to be here in the second week of February, when he will hold the final round of negotiations with his Indian counterpart Piyush Goyal, the Union Commerce and Industry Minister, the sources added. 

US President Donald Trump, the sources said, will formally sign the deal during his visit here later that month.

Also read: How mega science projects could help India become a $5 trillion economy

Concessions on both sides

According to sources, the main bone of contention in India-US trade negotiations was the price caps placed by New Delhi on US-made medical devices such as coronary stents and knee implants. 

India, the sources said, has now agreed to remove blanket price caps for high-end medical devices and bring them under price-control measures such as trade margin rationalisation (TMR).

The trade margin is the difference between the price at which manufacturers or importers sell to trade (price to trade) and the price to patients (maximum retail price), and TMR entails a cap on the profit that can be earned on a product. 

The US is the largest exporter of medical devices to India. In 2017, India slashed prices of coronary stents by 85 per cent while those of knee implants were also capped. According to the government, the idea was to make devices affordable and curb “illegal profiteering”.

The deal, which follows intense discussions over one year, is also expected to ensure a “partial restoration” of Generalised System of Preferences (GSP) benefits for Indian exporters.

The Donald Trump administration had stripped India of GSP benefits last June, immediately after Prime Minister Narendra Modi came to office for the second time, over lingering trade tensions.

The final contours of the deal were discussed last week during the visit of Brendan Lynch, the deputy USTR (South and Central Asia), and Christopher Wilson, the assistant USTR (South and Central Asia).

“Both the US and India have made substantial progress on the trade negotiations. We expect closure soon. We also expect it to be a win-win for both sides and some agreement on medical devices as well as on GSP for India, all these issues are on the table,” said Mukesh Aghi, president and CEO of the non-profit US-India Strategic Partnership Forum. 

“However, going forward, a free trade agreement (FTA) between both sides will be a positive development in the long run.”

According to sources, the FTA may be announced as part of a long-term plan between the US and India even as the US continues to express concerns over its trade deficit with India.

“A free trade agreement between India and the US looks quite far away, especially when it has taken years to conclude even the limited deal,” said Richard Rossow, Wadhwani Chair in US-India policy studies at Washington-based thinktank Centre for Strategic & International Studies.

‘All eyes now on the budget’

The Trump administration has been particularly upset with India for hiking customs duties on a range of products since 2014 that are of export interest for the US.

In 2014, New Delhi had raised tariffs on various products from the information and communications technology (ICT) sector, including cellphones.

New Delhi is now reportedly contemplating increasing import duties on over 50 items ranging from electronics, electrical goods, chemicals and handicrafts, which experts say may worsen tensions.

“All eyes are now on the budget, and if India decides to go for another round of hike in customs duties, especially on items such as IT goods, electronics or capital goods, then problems between India and US will only pile up,” Rossow added.

Last June, India had hiked customs duties on as many as 28 US products, including almonds, pulses and walnuts, in response to higher tariffs imposed by Washington on Indian products like steel and aluminium.

Also read: Why US-India trade deal didn’t work out on Modi trip & what next 


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