The ‘Namaste Trump’ event: Shaping U.S.-India trade relations

In his two-day visit in India, the U.S. tried to strengthen its country’s ties with India by signing 3 memorandum of understanding (MoUs), $3 billion worth defence deal, energy strategic partnership. The Prime Minister of India Narendra Modi and U.S. President Donald Trump have decided to take U.S.-India ties to global strategic partnership level.

• Addressing the ‘Namaste Trump’ event on Monday, Donald Trump had said that India should consider making the U.S. its prime partner in the defence deals. The two countries have expanded their defence corporation with $3 billion worth of defence deal of advanced military equipment for the Indian armed forces.
• The three signed MoUs are 1. MoU on Mental Health; 2. Safety on medical drugs; 3. Letter of Cooperation between Indian Oil Corporation and Exxon.
• The 45th President of the United States that both countries are committed to defend radical Islamic terrorism.
• Trump called Modi a ‘tough negotiator’ and said that the two leaders have agreed to be open to negotiations on a big trade deal.

Existing U.S.-India trade & investments

The United States has become India’s top trading partner, surpassing China in 2018–19, showed the data by India’s commerce ministry.

India’s imports for the US during April-December 2019–20 has been $27.6 billion and exports for the same period have been nearly $40.3 billion. The below chart shows India’s import/export data with the U.S. in 2018–19.

As per the Reserve Bank of India (RBI) data, the foreign direct investment (FDI) flows in India from the U.S. in 2018–19 (provisional) has been nearly $2.8 billion as compared to FDI inflows of $1.9 billion in 2017–18.

As the trade deal is in talks, the two important issues that should be taken care of are H1-B visa issue and India being back in U.S. GSP programme. Why?

Duty-free entry — GSP

The U.S. had removed India from its duty-free GSP programme in June 2019, citing that India did not assure reasonable access to its markets. However, there were reports in late 2019 that stated the U.S. was discussing a deal to reinstate GSP for India.

Generalized System of Preferences (GSP) is a U.S. trade program designed to help developing countries to use trade to grow their economies. GSP provides duty-free entry for up to 4,800 products imported from 129 designated beneficiary countries/territories.

H1-B visas

The Indian IT industry employees used to be the biggest beneficiaries of the H1-B visas issued by the U.S. to allow foreign employers to work temporarily in the country. But the Trump administration’s anti-immigration policies have pressured the IT services company.
There has been a consistent decline in the visas issued to Indian employees who used to go to the U.S. for temporary client projects. The visa rejection rates to Indian professionals rose to 24% in 2019.

Hope, the upcoming new BIG trade deal negotiates well in favour of our country and strengthens the economic ties between the two major countries.

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