1. U.S.’s decision to not extend Iran sanctions waivers to India

• This decision will have notable implications for India-U.S. relations, given the importance of New Delhi’s energy relationship with Tehran.

2. U.S.’s decision to withdraw GSP benefits for Indian exports

• Trump administration decided to withdraw GSP benefits for Indian exports in retaliation for Indian tariffs that the U.S. deemed to be prohibitively high
• US has also expressed deep discontent over India’s policies on e-commerce, intellectual property rights and data localisation.

3. India’s tariff structure

• According to Trump administration, India was at number 13 in the list of US export markets because of its “overly restrictive market access barriers”. India’s average applied tariff rate was “the highest of any major world economy”.
• According to World Trade Organisation (WTO) data, India’s average applied tariff is now around 13.5% — and there are plans to move towards ASEAN tariff rates progressively (approximately 5% on average).
• Over the last five years, however, there has been a move by the government to increase duties on a number of items.

4. Disputes under the WTO

Seven disputes between India and US are at various stages of the Dispute Settlement Mechanism under the WTO. These pertain to –

• poultry and poultry products from the US
• countervailing duties against India’s export of steel products
• measures against import of solar cells and modules under the National Solar Mission,
• the US’s Sub-Federal Renewable Energy Programmes
• US measures concerning non-immigrant visas
• India’s export promotion schemes and
• the US tariff hike on steel and aluminium products.

5. Capping prices of cardiac stents and knee implants

• In 2017, India capped the prices of cardiac stents and knee implants, slashing prices by over 70% and 60% respectively.
• The move impacted US giants like Abbott, Medtronic and Boston Scientific.

6. Walmart issue and data localization

• Two other issues that the US side has specifically raised during the latest round of negotiations are the “treatment of Walmart after their acquisition of Flipkart”, and the problems on data localisation reportedly faced by companies such as MasterCard and Visa.

Impact:

• India will scale up oil imports from other top producers
• GSP withdrawal will have minimal impact on India’s economy (we have covered comprehensively in previous month DNA articles)
• S.-India CEO Forum and the India-U.S. Commercial Dialogue is expected to ease tensions
• However, a full-fledged strategic partnership, which both countries endorse, will be difficult to achieve amid such multiple and long-standing disconnects on the trade and economic side.

Conclusion:

• Bilateral ties should go beyond technology transfers, arms sales, joint exercises, and foundational agreements on defence in order to achieve a robust and multifaceted strategic partnership.
• India-U.S. relations have potential to extend well beyond security, especially initiatives ranging from clean energy to innovation.
• The U.S. and India have long struggled to agree on what a strategic partnership should look like. Any strategic partnership must be broad-based, with trust and cooperation present across a wide spectrum of issues and not just limited to close collaborations in the guns-and-bombs category.
• In this regard, a true strategic partnership remains, at least for now, elusive between India and the U.S.