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Niggling issues in India-US mini trade deal mostly addressed: Commerce Secy

By Indivjal Dhasmana
February 04, 2021 12:59 IST
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India has demanded resumption of export benefits to certain domestic products under GSP, and greater market access for its products from sectors like agriculture, automobile, auto components and engineering.

On the other hand, the US wants greater market access for its farm and manufacturing products, dairy items and medical devices, data localisation, and import duties cut on some ICT products.

Commerce secretary Anup Wadhawan on Wednesday said that negotiations over the India-US mini trade deal are ongoing and contentious issues have largely been addressed.

"The sticking points have largely been addressed. There are no sticking points as such ... bilateral discussions are always ongoing, they never end... status is very good on that deal," Wadhawan told reporters.

He said the effort in any bilateral relationship is always to resolve issues as quickly as possible.

 

There were apprehensions that the proposed mini deal would be put on the back burner after Joe Biden took over the presidency of the US last month, as he has other more urgent work to focus on.

The two countries are negotiating a trade package to iron out certain issues and promote two-way commerce.

India has demanded resumption of export benefits to certain domestic products under the Generalised System of Preferences (GSP), and greater market access for its products from sectors like agriculture, automobile, auto components and engineering.

On the other hand, the US wants greater market access for its farm and manufacturing products, dairy items and medical devices, data localisation, and import duties cut on some information and communication technology (ICT) products.

The US has also raised concerns over the high trade deficit with India.

Equalisation levy:

Wadhawan reiterated the country's stand that it does not agree with the United States Trade Representative (USTR) report that the New Delhi's move to impose two per cent equalisation levy on foreign e-commerce firms discriminates against American companies.

Last month, an USTR investigation concluded that the tax on e-commerce supply discriminates against US companies and is inconsistent with international tax principles.

"We do not agree with that conclusion," Wadhawan said.

"Basically, if there is an economic benefit from a certain jurisdiction then there has to be some taxation in that jurisdiction...OECD (Organisation for Economic Co-operation and Development) is also moving in that direction that if you have an economic presence and economic gain, then you must have taxation in that jurisdiction.

"You have billions of dollars of revenue in a certain jurisdiction, you have to pay taxes," he said.

Some countries are protesting because they have huge domination in that kind of activity whether it is Facebook, Google or Amazon, he added.

Over a period of time when other countries also have presence in that space, those protesting now will themselves levy such a tax, he said.

Budget and exports:

Wadhawan said exports are picking up and will soon reach pre-covid levels.

Exports grew 5.4 per cent in January against 0.14 per cent in December.

Exports rose only in three months-- February, September and December-- in the entire 2020.

Wadhawan said the government is restructuring the economy which would help meet all the unachieved potential.

He counted the productivity-linked scheme and the measures announced in the Budget in this regard.

He said the Budget measures such as provisions relating to countervailing duties and anti-dumping duty, a scheme for mega investment textile parks (MITRA), substantial investments in the development of modern fishing harbours an fish landing centres, operation green scheme for agriculture sector, would enable growth, diversification and technological enhancement of India's exports.

"You will see a very robust export sector in the future," he said.

Remission of Duties and Taxes on Exported Products (RoDTEP) scheme:

"We are in the process of determining the rates and identifying the lines ...work is in a very advanced stage," he said.

On whether agriculture infrastructure cess announced in the Budget will also be refunded, he said in principle any duty or tax which is otherwise not refunded will be in the ambit of RoDTEP.

RoDTEP which has replaced an earlier scheme has come into effect from January one this year but the rates have not been notified so far.

Customs duties:

On changes in the customs duty in the Budget, Wadhawan said the broad principle is that it should do away with the inverted duty structure and increase the competitiveness of our exports.

He said all customs duties are within the bound duty rates committed by India in the World Trade Organisation (WTO).

"...and see how our duty structure has evolved over a couple of decades and average levels have come down on a secular basis..they are making raw materials affordable and boosting manufacturing.

Free Trade Agreements (FTA) reviews:

Wadhawan said some of the reviews are on.

"We will keep working towards having those reviews at the earliest possible time frame," he said.

The Regional Comprehensive Economic Partnership:

"Our stance is clear," he said.

India had opted out of the deal in 2019.

RCEP says that its doors for India are open.

Photograph: Eduardo Munoz/Reuters

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Indivjal Dhasmana
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