New Delhi will push Washington to reinstate the Generalized System of Preferences (GSP) status, which allows duty-free entry of certain Indian goods into the US, during US Trade Representative Katherine Tai’s three-day visit to India starting Friday.
A totalization agreement that provides social security benefits to Indian IT professionals traveling to the US for short periods is also expected to feature during the 14th ministerial-level meeting of the US-India Trade Policy Forum (TPF). TPF was set up in 2010 to strengthen and expand bilateral economic and trade relationship.
Tai and commerce and industry minister Piyush Goyal will co-chair the Trade Policy Forum and focus on boosting trade ties primarily in agriculture, industrial products, services, and intellectual property protection.
During the course of her visit, Tai is also expected to meet with minister of external affairs Subrahmanyam Jaishankar.
The US is India’s largest trading partner but, between April and November of the current fiscal year, merchandise trade between both countries dropped by 9% to $79.28 billion from $86.98 billion in the year-ago period.
India’s merchandise exports to the US during the period dropped by 5.23% to $50.33 billion from $53.11 billion in the year-ago period, while imports from the US fell 14.52% to $28.95 billion against the comparable period of the previous year.
Notably, with 20% of its merchandise exports headed for the US, India also counts on the US as a key market for its informational technology services.
Ajay Sahai, director general and chief executive of the state-backed Federation of Indian Export Organisations (FIEO), said reinstating GSP will boost India-US trade to the ambitious goal of $500 billion annually.
“India had pushed for the resumption of GSP during the 13th TPF meeting held last January, and the US responded positively,” Sahai said.
GSP has played a key role in boosting India’s exports, especially chemicals, engineering goods, footwear, and leather, which led to India’s growing market presence in the US, Sahai said.
The annual bilateral trade between both countries has grown from $120 billion in 2021-22 to $129.4 billion in 2022-23, with a mutual goal of reaching $500 billion.
During this period, the US also invested $6 billion in India as foreign direct investment.
The GSP program, which was started way back in 1976 and provided duty-free entry for about 2,000 Indian products into the US market, was revoked in 2019 by the Trump administration.
Introduced in 1976, around 2,000 Indian products, including chemicals and engineering goods, were getting duty-free access to the US market under the GSP till 2019, when the Trump administration revoked it.
In 2017, India was the biggest beneficiary of the GSP program, with $5.7 billion in imports to the US.
Despite American companies protesting that ending the GSP would impose a $300 million tax burden on them, the Trump administration revoked the program, citing India’s failure to provide fair and reasonable market access to American companies.
Apart from GSP, Sahai said, Indian businesses hope the backlog of visas for Indian businesspeople will also be cleared.
The issue of mutual recognition of degrees and the totalization agreement, which ensures that Indians working in the US receive the social security benefits for which they have paid through social security taxes upon their return to India, will also come up for discussion, Sahai added.
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