(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)


WASHINGTON  - India has an opportunity to mend U.S. commercial ties. President Joe Biden’s aides are reviewing the South Asian nation’s loss of preferential trade status and his trade representative nominee Katherine Tai, whose confirmation was approved by a Senate committee on Wednesday, says the topic is high on her radar. Small gives by Prime Minister Narendra Modi could lead to a big win.

Donald Trump’s warm relations with Modi raised hopes for a trade deal. Instead U.S. officials found the Indian economy becoming more closed. For example in 2018, New Delhi tweaked rules on how foreign-owned retailers operate after Walmart acquired a majority stake in e-commerce startup Flipkart. In 2019, the Trump administration decided to revoke India’s participation in the Generalized System of Preferences program, which allowed almost $6 billion in products to enter the United States duty-free each year. Imports of Indian goods fell by more than 10% to $52 billion in 2020, per the U.S. Census Bureau.

Now Team Biden will have to decide how patient it wants to be. Under Trump, efforts to resolve the dispute went nowhere as compromises on U.S. medical devices, such as limiting profitability, were rejected. India imports almost 80% of its medical devices, according to the U.S. Commerce Department, but barriers include price caps on knee implants, heart stents, and other products. Continuing resistance could have Biden turning to the Trump playbook and impose more tariffs.

Modi’s self-reliance pitch partly aims to support businesses reeling from the pandemic but it compounds the perception that India is turning inwards. That’s especially true following New Delhi’s decision to stay out of the recent Regional Comprehensive Economic Partnership, which brings together China and other Asian countries accounting for 30% of global GDP. Indeed, India doesn’t have free trade agreements with any of its top four trading partners.

Even so, India admits global economic engagement is vital to its success. Growth in the world’s fifth largest economy was slowing before the pandemic and opening up a little might hurt in the short term. But even minor concessions on medical devices would boost U.S. confidence in the relationship and could result in restoring India’s GSP status. That’s probably worth it.



- The U.S. Senate Finance Committee on March 3 unanimously backed Katherine Tai to be the country’s next trade representative. She told senators at her confirmation hearing on Feb. 25 that India’s trade status is high on her radar.

- India’s designation as a beneficiary developing country under the Generalized System of Preferences program was revoked in 2019 under the Donald Trump administration. India failed to provide assurance of equitable access to its markets, according to the U.S. Trade Representative.

- Under the program, certain products can enter the United States duty-free if a country meets certain requirements.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Una Galani and Amanda Gomez) ((gina.chon@thomsonreuters.com; Reuters Messaging: gina.chon.thomsonreuters.com@reuters.net))