The Coronavirus Pandemic and the subsequent global outrage against China for spreading the Wuhan virus across all parts of the world has led to India and the United States coming closer- even more than they already were. And now it seems that one of the longstanding issues in bilateral ties is going finally find a solution with a mini trade deal, which could lay the groundwork for the final one.
New Delhi and Washington have been struggling to strike a mini-trade deal for quite some time, but with the pandemic, intensifying US-China tensions and Sino-India border tensions, the two countries are coming together to counter China through a swift, smaller trade deal for the time being.
Indian ambassador to the US Taranjit Singh Sandhu has confirmed that the two countries are on the verge of concluding a “smaller trade deal” very soon. Speaking at the virtual West Coast Summit from Washington DC, Sandhu said, “I continue to be very optimistic about the trade deal. The pandemic is a setback. But nevertheless, both the trade sides have been in touch. The top leadership has also been talking about it and I feel that perhaps in the coming few weeks we should be able to strike a smaller trade deal.”
The two countries have certain issues on the trade front due to which a trade deal has remained elusive thus far. The United States remains concerned about its trade deficit of 23.2 billion dollars with India, and wants greater access for its farm and manufacturing products, dairy items and medical devices in India, and also import duty cuts on some information and communication technology (ICT) products.
India, on the other hand, has been looking for exemption from high duties imposed by the United States on Steel and Aluminium products, reinstatement of export benefits under the Generalised System of Preferences (GSP) and greater market access for its products across different sectors, such as agriculture, automobile, auto components and engineering.
No trade deal was signed even during US President Donald Trump’s February visit to India, but circumstances have changed three months hence laying the ground for a swift trade deal.
Underscoring the changing equations that have created an opportunity for a smaller trade deal between the two countries, the Indian envoy added, “The understanding between our leadership was that we will go in for a smaller one [trade deal] and then immediately start negotiations on the larger trade deal... It will be a win-win situation for both sides and it will help in the overall confidence building because, during this particular phase, the US and India have been reliable partners during this crisis, particularly in supply chains in the pharma sector. Keeping in mind our domestic demands, we have ensured that we supplied the medicines and at the same price. That has had an impact and given confidence [to the US] and it will be an important foundation for the smaller trade deal to be announced soon enough.”
India came to the rescue of the United States during the COVID-19 Pandemic by supplying the Hydroxychloroquine (HCQ), an anti-Malarial drug that is being touted as a possible cure for the novel Wuhan virus and was personally endorsed by the US President Donald Trump.
Prime Minister Modi’s ‘HCQ diplomacy’ has clearly been a game-changer in Indo-US ties and it is now paving the way for a swift, mini-trade deal that will ultimately pave the way for a larger trade deal between the two countries.
In fact, the Pharma sector seems to be at the forefront of this anticipated mini-trade deal, and India Today has quoted Congressman Ted Yoho as saying, “There is a rapid movement to remove APIs and manufacturing out of China to trusted allies like India or to bring them back home domestically. All that is going to be economic pain on Xi Jinping and the communist party.”
With the United States pushing New Delhi to shift API manufacturing out of China, India’s plans to gradually shift production to India are bound to get a massive boost. It must be kept in mind that though India is a supplier of finished drugs to many countries, drug manufacturers import 70 per cent of their API needs from China.
India’s pharmaceutical sector is set to boom even further in a post-COVID world, and there have already been hints that the United States is going to discontinue its highly protectionist approach insofar India’s access to the US markets in the Pharmaceutical sector is concerned. To vindicate this further a US lawmaker is himself encouraging India to replace China in API manufacturing. India’s Pharmaceutical sector can easily move towards self-reliance with such a development.
It is being largely accepted that the Coronavirus Pandemic can be a blessing in disguise, and it seems that India and the United States have understood that there is no better time to strike a mini-trade deal. As the two countries move in this direction, the only aim is to re-shape the supply chains and hurt China in an unprecedented manner.