Reaping The Benefits

Given the backdrop of the US-China trade war, Trump’s visit to India offers diverse opportunities for Delhi to profit from its growing relations with Washington

- Subrata Majumder

Not too long ago, India refused to join RCEP because China became a big burden for India’s trade deficit. Export is recognised as a strong driver for growth when the nation is reeling under slow growth, according to an economic survey. The US is expected to play an important role in this regard as it is the biggest export destination for both goods and service from India. It accounts for 16 per cent of goods exports and 50 per cent of IT and BPO services exports.

USA emerged as the biggest trade partner of India in 201819. It pushed China to the second position. The categorical difference between the two in terms of trade structure is that while trade with the USA has surged due to exports by India, trade with China increased due to large scale imports from China. This translates into the fact that trade buoyancy with the US is more gainful than China. This has raised hopes for offsetting the export losses by banking on trade with the US and not joining RCEP.

It is ironical that despite concerns raised over Trump’s protectionism, USA has emerged as the biggest export destination for India. A number of disputes broke out between USA and India, owing to Trump’s ‘America First’ policy. USA has recently suspended the GSP scheme, pointing towards India’s high tariff on Harley Davidson motorcycles and raised objection to the MEIS scheme, after India’s per capita income exceeded the WTO threshold limit ($1000 per year for three years in a row).

The debut to Trump-Modi hobnob began with both leaders meeting on the sideline of G-20 summit in Kobe in July 2019. The meeting became a gamechanger while pursuing each other for readjustment with trade wars.