Refusing to be apologetic about its trade surplus with the US, India will soon submit a document to the US Trade Representative’s office highlighting why the existing trade balance is not a true reflection of Indo-US trade relations and emphasising that it has been of benefit to both countries.
India will also list the areas where the US now has more opportunities of exporting to India, such as aviation and energy, a government official said.
“When we visit the USTR’s office later this month to take forward the talks that started in New Delhi last month for easing trade tensions, we want to make the right start by removing the stigma attached to our trade surplus. We were told we could present our side of the story to the USTR in Washington when we met his team in New Delhi recently. That is what we are going to do,” the official told BusinessLine.
While India’s exports of goods to the US have been higher than its imports, this cannot be seen in isolation but needs to be compared with other factors such as people-to-people movement, the official said. “Students from India have been going to the US for higher studies for a long time and they contribute to the US economy. Similarly, IT companies from India have also played an important role in providing employment in the US and adding to the national income,” he said.
Washington needs to look at the composition of India’s exports, which consist of a number of raw materials serving as inputs for the US manufacturing industry.
“One reason for US exports being lower than potential is also the number of export restrictions that the US government puts in place for various reasons ranging from defence and strategic to domestic stability,” the official added.
Earlier this year, the Trump regime listed India amongst the countries with which it runs a trade deficit and asked the US Commerce Department to “identify every form of trade abuse and every non-reciprocal practice that contributes to the US trade deficit.”
Later, when it imposed additional import duties on aluminium and steel to punish certain trade partners, including China and the EU, the list again included India.
“It is unfortunate that the US government clubbed India with China, which has a big trade surplus with the US. The surplus that we have is not because of any malpractice on our part but because of the nature of our trade relations,” the official said.
India is hoping to persuade the US to withdraw the higher import duties of 10 per cent and 20 per cent imposed on aluminium and steel, respectively, before August 4, so that it does not have to implement the retaliatory duties notified by the Finance Ministry.
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