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India-US trade deal

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With US President Donald Trump's India visit coming to an end, it's time to step back and reflect on its significance against the larger interests of US and India as the two sides try to finalise a free trade agreement.

Limited trade deal

A bilateral trade deal between the countries, likely to be a $10 billion ‘limited trade deal’, is critical for their business and trade interests, and also significant for regional economic conditions in South Asia and the Indo-Pacific region at large.

Why is that the case? One, bilaterally, US is India's largest trade partner now. It is also one of the countries that India has a trade surplus with, which stood at $16.85 billion in 2018-19.

China was India's largest trade partner between 2013-14 and 2017-18. A limited trade deal agreement between US and India is likely to restore the General System of Preferences (GSP) scheme for India in return for dismantling retaliatory tariffs on American almonds, walnuts and pulses apart from reducing duties on farm products and luxury goods like Harley-Davidson motorcycles.

However, a trade surplus with the US does not necessarily mean that Indian exporters have had a larger pie of business in the US. Trade agreements today go beyond a negotiation on tariffs and quotes (much lower than in the past).

Their importance lies in implicit........

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