- Donald Trump, President of the United States, has lashed out on Twitter against India’s retaliatory tariffs.
- He stated that India has had a ‘long field day’ of imposing tariffs on American products.
- Bilateral ties between the two countries were expected to improve after Narendra Modi, India’s Prime Minister, spoke to Trump on the sidelines of the G20 Summit in Osaka last month.
Bilateral ties between India and the United States seem to be worsening as the US President, Donald Trump, tweeted that India has had a ‘long field day’ of imposing tariffs on the American products.
Relations between the two countries have been deteriorating under the wave of global protectionism since Trump removed India from the
Generalised System of Preferences (GSP). India, in retaliation,
imposed tariffs on 28 US products — including almonds, for which India is the biggest importer from US.
Bilateral ties had seemed to be mending when the Indian Prime Minister Narendra Modi, reportedly met Trump on the sidelines of the G20 Summit in Osaka last month. They were supposed to hash out trade issues, but those efforts seem to have gone in vain.
What seems to be the issue here?
The US administration has been
criticizing the Indian government for imposing tariffs that are discriminatory and distort trade.
India has recently promulgated a number of data localisation requirements that would serve as significant barriers to digital trade between the US and India.
US Trade Representative’s 2019 National Trade Estimate Report on Foreign Trade Barriers
The main bone of contention seem to the
new e-commerce rules that shift the
balance of power between foreign companies and domestic enterprises, the impetus on
data localisation, and
price caps on medical equipment.
The new e-commerce rules have adverse implications for Walmart and Amazon, both US giants, that are currently the top two players in the Indian online retail market. The regulations keep MNCs from launching their private label products, restrict deep discounting and would require a complete overhaul of their supply chain.
Data localisation is also an added cost for data management companies in India, most of whom are foreign players with servers placed across the globe.
The price caps on medical devices was initiated to ensure that they are affordable to the poorer patient. However, US companies like Abbot and Boston Scientific, have
not been happy about limiting their profits from India’s $5 billion medical device market.
Even though the price regulation came into effect in 2017, the issue is yet to be resolved.
The current trade ties between India and the US may not be an immediate threat but may have
long term implications on the trade deficit of $21.3 billion that currently swings in India’s favour.
See also:
India hits back at US with added tariffs on 28 products including almonds, apples and walnuts — just ahead of Pompeo's visitRise in US H-1B visa rejection may force Indian tech companies to look at M&AAmazon, Walmart seek US help against India’s new draft E-commerce Policy
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