India's Sitharaman: US trade pact a 'good possibility,' should come soon
As President Donald Trump hammers out a partial trade deal with China, there’s another front that’s gotten far less attention: India.
The two economies have been battling each for more than a year, with tensions rising in June after the president removed key Indian trade preferences. Since then, both governments have moved toward a reconciliation, with most hopeful that a deal will come sooner rather than later.
“I think good progress has been made,” Indian Finance Minister Nirmala Sitharaman told Yahoo Finance in a recent interview in New York. “I see a good possibility of a good trade deal with the U.S. soon.”
The Finance Minister’s visit comes on the heels of Prime Minister Narendra Modi’s big U.S. tour where he met President Trump, attended a rally for Indians in Houston, Texas and later the United Nations General Assembly. Modi’s big pitch for India was that the country was ready for — and was eagerly seeking — foreign investment, and that it had embarked on business-friendly reforms to support that.
Trade tensions simmer
While Modi and Trump touted their close relationship, trade discussions have created fissures between New Delhi and Washington.
Earlier this year, Trump accused the Indian government of failing to “provide equitable and reasonable access to its markets in numerous sectors,” and stripped the country of the benefits under the Generalized System of Preferences (GSP) program. The preferential trade treatment had allowed India to export certain products duty-free. India has been the biggest beneficiary of the program that dates back to the 1970s.
In addition, Trump imposed steel and aluminum tariffs on India in 2018. India requested an exemption from Washington, only to have it refused.
That prompted Modi to retaliate, slapping higher tariffs on 28 U.S. products, including almonds, apples and walnuts.
Still, Modi’s visit last month seemed to suggest that a trade deal —albeit a limited one — was coming soon, a sentiment echoed by Sitharaman.
“Each country has its national priorities and putting your national priorities on the top … guiding a trade talk is not a bad thing at all,” she said. “But talks are happening. I'm sure things will get resolved.”
America’s list of grievances
Aside from steel, the White House has raised a litany of additional grievances with India. Earlier this month, U.S. Commerce Secretary Wilbur Ross commented that India is “if not the most protectionist, certainly one of the most protectionist.” Ross is also concerned about India’s regulatory changes that favor domestic companies over foreign ones, such as in the case with Walmart and Mastercard.
Under current rules, India doesn’t allow companies like Amazon (AMZN) and Walmart-owned (WMT) Flipkart to sell products from companies they have an equity interest in. The policy was implemented by Modi back in May.
“American companies are showing goodwill and cooperative attitude towards Make in India and the other programs, but there is a limit to the discriminatory [behavior],” Ross told CNBC-TV18.
In the Mastercard case, U.S. Secretary of State Mike Pompeo had previously expressed concerns about India’s push for more stringent rules on companies regarding data. Last year, the Modi government passed a comprehensive Data Protection Bill, requiring corporations to in part, store data collected in India in a server or data center located domestically.
That prompted foreign companies like Mastercard (MA) to raise concerns about “data protectionism” and additional costs associated with investments in data storage.
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter.
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.
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