New Delhi: The US sanctions on Iran could mark yet another low in trade ties between the US and India.
Trade has always been the Achilles’ heel in the relationship between the US and India, despite a vibrant strategic partnership.
Iran tensions present fresh barriers to strained Indo-US trade ties
Since taking charge as US President in 2016, Donald Trump has repeatedly accused India of resorting to discriminatory trade practices that he says have resulted in a large trade deficit for the US. Trump has specifically picked up the issue of high import duty on the iconic Harley-Davidson motorcycles and threatened to impose reciprocal tariffs. However, India has insisted that its trade policy is non-discriminatory and transparent.
Things worsened when the US dragged India to the World Trade Organization on its export subsidy programmes, threatening to withdraw the generalized system of preferences (GSP) benefits to Indian labour intensive exports worth $5.6 billion and refusing to grant a waiver to India after it unilaterally raised import duties on steel and aluminium invoking its national security provision.
To pacify Trump, India has increased its oil imports from the US. In the first five months of this financial year, India imported $3.4 billion mineral fuel from the US against $4 billion of imports during all of 2017-18.
India and the US are negotiating a trade package that would involve give-and-take from both. India seeks a waiver of the unilateral tariff hikes imposed by the Trump administration on steel and aluminium and continuance of GSP benefits. It has deferred its plan to impose tit-for-tat tariffs on 29 US products worth $235 million till 2 November with Indian officials maintaining that the recent round of trade talks have been “encouraging”. Signs are the government will again defer the deadline by 45 days.
India and the US will be able to resolve the Russia and Iran sanctions issue if they continue to look at the bigger picture of their relationship, former US ambassador Richard Verma told the US-India Strategic Partnership Forum on Tuesday. “People will come to the table and figure out a resolution because our collective interest in advancing our strategic and economic partnerships are so important and so consequential that we will get through this. In my view, there is no more important relationship in this century than the US-India relationship,” he said.