US to discuss trade deal with India before Donald Trump's visit

As a precursor to long-term Free Trade Agreement (FTA) between New Delhi and Washington, US Trade Representative Robert Lighthizer will be on India visit to finalise the trade deal. Legal vetting of the trade deal in currently underway and it will be announced when US President Donald Trump visits India, likely on February 24.

India has reportedly sought to restore preferential trade status under the Generalized System of Preference (GSP), which was terminated by the Trump administration last year. According to the US Trade Representative, GSP provides opportunities for many of the world’s ‘poorest countries’ to use trade to grow their economies and climb out of poverty. 

However, Trump recently commented that the United States is also a “developing nation” like India and China, indicating that any relief to India remains doubtful. But a win-win deal for both the US and India could improve electoral chances of Trump ahead of the 2020 presidential elections and boost India’s economic slowdown. Trump has already sealed ‘phase one’ deal with China after months of a tariff war and would be looking to finalise a trade agreement with India. 

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Meeting with Goyal

Lighthizer is likely to meet Commerce and Industry Minister Piyush Goyal during the visit after a six-member team from US administration visited New Delhi last week. They met Goyal and other ministers to discuss the nuances of the trade deal. Lighthizer’s visit comes at a time when India is looking to spur investment and consumption to revive the economy through Union Budget.

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According to media reports, the trade agreement could raise India’s defence and energy purchases from the US. While India is expecting the partial restoration of the preferential trade allowing duty-free exports, New Delhi is reportedly considering to ease pricing caps on medical equipment. India’s refusal to join the Regional Comprehensive Economic Partnership (RCEP) citing concerns for Indian farmers, MSMEs, and the dairy sector has left New Delhi with fewer options in terms of FTA.

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