New Delhi insists on mandatory certification of dairy products by veterinary officials specifying that the source animal was not raised on feed made of bovine extracts, a religious issue in India. The European Union, Australia and New Zealand provide this certification, but the US has been stalling on the issue.
India-US trade talks have run into obstacles after Washington sought access for its dairy industry without addressing New Delhi’s concerns on the issue, almost ruling out any deal during President Donald Trump’s visit.
The chances of an agreement haven’t increased by the prospect of US secretary of commerce Wilbur Ross accompanying Trump, given the differences between the two sides, sources told ET.
India insists on mandatory certification of dairy products by veterinary officials specifying that the source animal was not raised on feed made of bovine extracts, a religious issue in India. The European Union, Australia and New Zealand provide this certification, but the US has been stalling on the issue. “These were the red lines,” said an official, adding that even though many issues have been resolved, the ball is now in US’ court.
While Ross is coming, United States Trade Representative (USTR) Robert Lighthizer has cancelled his trip. Trump is scheduled to be in the country on February 24-25. Ross had also visited India in October last year.
Though talks between the two countries are ongoing, the official said that New Delhi is standing firm on its demands and is in no hurry to conclude a deal.
Our news source ET reported last week that India has already offered sharply lower duties on high-end bikes, which would cover Harley-Davidson motorcycles. Trump has often cited the brand when referring to what he describes as India’s excessively high duties on US imports. However, on the issue of tariff hikes in the budget, including those on medical devices, officials pointed out these are not US-specific but applicable to all countries.
The chances of a deal have also dimmed following Washington’s recent move to remove India from its list of developing countries exempt from the investigation into whether they harm US industry with unfairly subsidised exports, said experts.
India joins nations such as Brazil, Indonesia, Hong Kong, South Africa and Argentina, which no longer get special preferences under the country’s methodology for countervailing duty probes.
The US removed India from the list on account of the country being a G-20 member and having a share of 0.5% or more of world trade.
The US is also unable to yield on India’s demands such as restoration of GSP benefits and allowing access to the country’s market for many agricultural products because of political considerations due to the upcoming presidential elections in November. GSP is the Generalized System of Preferences that eliminates duties in order to promote economic development.
The industry is, however, bullish on defence deals, which could mean more local business through offset clauses. These require a defence equipment supplier to source a certain percentage of the deal value locally. Any defence deal with the US could mean more joint ventures and higher imports will result in opportunities for offsets, said an industry representative.
“American companies have formed joint ventures here and are exporting but actual meaningful industry cooperation is very low,” said an industry representative.