News Highlight
United States Secretary of the Treasury Janet Yellen’s visit to India highlights the renewed focus in India and America on strengthening economic ties.
Key Takeaway
- The current global environment, with its macroeconomic, trade and strategic challenges, makes it all the more compelling for the world’s two largest democracies to deepen their engagement in a mutually beneficial way.
India-US economic relations
- Bilateral trade
- In 2021, overall U.S-India bilateral trade in goods and services reached a record $157 billion.
- The United States is India’s largest trading partner and most important export market.
- Foreign direct investments (FDIs)
- According to government data, the US replaced Mauritius as the second-largest source of foreign direct investment into India during 2020-21, with inflows of USD 13.82 billion.
- Strategic Trade Authorisation (STA) status
- India is the 37th country to be designated the STA-1 status by the United States.
- STA allows for license exceptions with regard to exports from the US.
- East Asia Summit
- It was established in 2005; it is a form of 18 regional leaders for strategic dialogue and cooperation on the Indo-Pacific region’s critical political, security, and economic challenges.
- India-US 2+2 Ministerial Dialogue
- India-U.S. 2+2 Ministerial Dialogue is led by the heads of foreign and defence ministries of India and the US.
- Three rounds of this Dialogue have been held so far (in September 2018, December 2019 and October 2020).
- The Flow of remittances
- The US is the 2nd most prominent source of remittances to India at $11 billion.
Issues and challenges
- Trade Barriers
- The US has often criticised India at the WTO for setting protective trade barriers and curbing American access to Indian markets.
- Low-intensity Trade War
- Two countries are locked in a ‘low-intensity trade war’ through the imposition of tariffs, thus restricting trade.
- The United States has longstanding concerns over India’s tariff regime, especially in agriculture.
- For example, India opposes the continued U.S. steel and aluminium tariffs applied since 2018.
- The Generalised System of Preference
- The Generalized System of Preferences (GSP) is a trade program that provides non-reciprocal, duty-free treatment for certain U.S. imports from eligible developing countries.
- The US withdrew the Generalised System of Preference which made many Indian products liable to entry duties by the US.
- Immigration
- The US has frequently initiated action in curbing the number of H1B visas to Indian professionals and reviewing the norms guiding them.
- ‘Special 301’
- India is on the watch list for IP framework, where the US claims that India is non-compliant mainly with global Intellectual Property Rights frameworks.
Content Source: The Hindu