India-US trade policy

Context: India and the US are set to take up a number of sticky trade issues at the trade policy forum meet that begins today (January 12).

Importance of Trade Policy Forum Meeting:

• The US is India's largest trade partner, and India heavily relies on US demand for export earnings.
• India aims to benefit from the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) to counter China's influence in the region.
• Closer trade ties with the US can attract more Foreign Direct Investment (FDI) amid the ongoing supply chain reset.
• The meeting provides a platform to resolve trade tensions and seek export growth in the absence of a free trade agreement (FTA).

Restoration of GSP as a Key Demand:

• GSP benefits were lost in 2019 due to Trump's trade measures, impacting India's $5.7 billion imports into the US.
• Despite expectations, GSP restoration has not occurred under the Biden administration.
• The demand for GSP restoration is crucial for Indian exporters to regain duty-free status and boost trade.

US Concerns about India's Laptop Import Monitoring System:

• The US questions India's proposed laptop import monitoring system, considering it a non-tariff measure.
• India clarifies its intention to ensure IT products come from "trusted geographies."
• This concern is likely to be discussed during the trade policy meeting.

Boosting Service Trade with the US:

• India seeks a liberal visa regime to enhance service trade, addressing concerns over visa delays during the pandemic.
• Services exports to the US have contributed to lowering India's current account deficit.

Totalisation Agreement Demand:

• India reiterates the demand for a totalisation agreement to provide social security to Indian professionals in the US.
• The agreement aims to eliminate dual social security deductions and benefit the Indian IT sector workforce.
• India has provided the US with necessary data about social security schemes for the proposed agreement.

Generalized System of Preferences

• It  stands as the oldest and largest trade preference program in the United States.
• Its primary objective is to encourage economic development by granting duty-free entry or reduced Most Favored Nations (MFN) tariffs for numerous products from specified beneficiary countries.
• This program operates as an overarching framework encompassing the majority of preferential schemes extended by developed nations to those in the process of development.
• Essentially, it facilitates the duty-free access or reduced tariffs for eligible products exported by beneficiary countries to the markets of donor countries.