News Highlight
India and the United States held the 13th Ministerial-level meeting of the India-United States Trade Policy Forum (TPF) in Washington, DC, on January 11, 2023.
Key Takeaway
- The Ministers underlined the significance of the TPF in forging robust bilateral trade ties and enhancing the bilateral economic relationship to benefit working people in both countries.
- They appreciated that bilateral trade in goods and services continued to rise rapidly and reached about $160 billion in 2021.
- The Ministers highlighted the work undertaken through the TPF working groups since the 12th TPF Ministerial.
- The United States welcomed India’s participation in the Indo-Pacific Economic Framework for Prosperity (IPEF).
The India-United States Trade Policy Forum (TPF)
- About
- The Trade Policy Forum (TPF) is the main forum for resolving India-US trade and investment concerns.
- The TPF was formed in July 2005 to address trade and investment challenges.
- Objectives
- Firstly, to encourage commerce and investment between the two countries.
- Develop and implement trade policies under international commitments using transparent methods.
- Create an environment that encourages technical collaboration and creativity.
- Encourage inclusive economic growth and employment creation in India and the United States.
- The Trade Policy Forum is co-chaired by India’s Minister of Commerce and Industry and the United States Trade Representative.
The status of India-US bilateral trade
- The United States remained India’s largest commercial partner, export market, and bilateral trade.
- The United States has invested 46 billion dollars in India.
- Over 2,000 US corporations, including every major Fortune 500 company, are headquartered in India.
- Over 200 Indian firms created over 125,000 jobs in the United States across all states.
- The United States is one of the few countries with whom India enjoys a trade surplus, with exports exceeding imports.
- Among the most trafficked goods are pearls, precious stones, pharmaceuticals, machinery, electronics, apparel, automobiles, chemicals and fish products, optical, photo, medical devices, and aluminium.
Why India-US Trade Relations are Improving?
- Growing Trust and Cooperation
- Growing cooperation in various areas has increased bilateral trade with the United States.
- Trade growth is projected to continue in the coming years as New Delhi and Washington work to enhance economic ties.
- Alternative to China
- India is emerging as a reliable commercial partner, and global corporations are reducing their reliance on China for supply and expanding into other nations such as India.
- Great Potential for the Indian Economy
- India is the world’s fastest expanding market economy, with an unrivalled demographic dividend.
- Furthermore, it offers excellent prospects for technology transfer, manufacturing, trade, and investment between the United States and India.
Way Forward
- Tariff Removal
- India should take the lead and consider unilaterally reducing its retaliatory tariffs as a first step toward a potential agreement.
- This will present India as an eager participant in trade talks.
- Even though lowering tariffs without a commitment from the US is risky, it will strengthen the bilateral trade relationship in the long run.
- Countering China Together
- Deepening trade ties with allies committed to India’s prosperity is one way India may fight China strategically.
- A deal with the US will help India both strategically and economically.
- As corporations in the United States consider shifting some manufacturing from China, a vital trade strategy can supplement the Production-Linked Incentive (PLI) programmes, boosting manufacturing and exports.
- Facilitating Digital Growth
- To encourage future growth in the digital realm, which accounts for nearly USD 100 billion in bilateral trade, the two countries must address several foundational concerns.
- It includes a digital service tax, cross-border data flows, and common cellular standards.
- India must conform to evolving global agreements on the digital services tax to accelerate trade.
Pic Courtesy: freepik
Content Source: PIB