India-us trade negotiations are going in full speed: FM
In 2018-19, India’s exports to the US stood at $52.4 bn, while imports were $35.5 bn
WASHINGTON DC: Finance Minister Nirmala Sitharaman has said the negotiations between India and the US on a trade deal are going in "full speed" and expressed hope that an agreement will be structured soon.
The ongoing trade deal negotiations briefly came up for discussion during a pull aside between Sitharaman and US Treasury Secretary Steven Mnuchin at the IMF headquarters. Mnuchin is scheduled to visit India early next month.
"In fact, I broadly mentioned it to Secretary Mnuchin, but that is something on which the Commerce minister and Mr (Robert) Lighthizer (US Trade Representatives) are working. My inputs are that the negotiations are going in full speed and there's a great intensity with which both sides are engaging and hopefully the deal will be structured soon," Sitharaman said on Saturday.
India is demanding exemption from high duties imposed by the US on certain steel and aluminium products, resumption of export benefits to certain domestic products under their Generalised System of Preferences (GSP), greater market access for its products from sectors, including agriculture, automobile, auto components and engineering.
On the other hand, the US wants greater market access for its farm and manufacturing products, dairy items and medical devices, and cut on import duties on some ICT products. The US has also raised concerns over high trade deficit with India.
In 2018-19, India's exports to the US stood at $52.4 billion, while imports were $35.5 billion. Trade deficit dipped from $21.3 billion in 2017-18 to $16.9 billion in 2018-19.
Responding to a question, Sitharaman said a totalisation agreement with the US has always been on the cards.
Totalisation agreement seeks to eliminate dual taxation with regards to social security and medicare taxes in the United States.
"One of the reasons why that was never responded to was that India did not have a social welfare net or social insurance cover for Indians in India. And therefore, if they had to give it, they wouldn't be given in the sense where would it be used? she said.
"Today, I think most private insurances or for many of the families which are below the certain level of income, Ayushman Bharat is a fantastic big coverage. There is also now a lot more private sector option for insurance coverage. So whether that has been factored in now in the negotiations on this particular thing, I'm not adequately informed," Sitharaman said.
She said India in the past even, when she was the Commerce minister, had put several arguments before but that was repeatedly stonewalled over the health cover issue.
"I remember that. I've heard it at least twice in my negotiations on the totalisation," Sitharaman said. It could be "humongous amounts", she added.
Most of the Indians working in the US unfortunately have no claim over their social security deductions, because there is a minimum period of at least 10 years, she said.
"It's so designed that you really can't benefit. And no one in any case does live for that duration in this country," she said. An official release issued said Sitharaman had a "fruitful" dialogue with Mnuchin.
The two sides agreed to continue the dialogue in the first week of November during Mnuchin's visit to New Delhi, it said.
Meanwhile, she also said the global economic risks and imbalances reinforce the need to strengthen international cooperation at the multilateral level, besides governmental initiatives.
She stated this in her intervention during International Monetary and Financial Committee (IMFC) Plenary Session on Saturday in the ongoing Annual Meetings 2019 of the IMF and World Bank being held in Washington DC, US.
At the national level, a calibrated and balanced approach to deploying a mix of fiscal, monetary and structural measures by countries can help achieve their growth potential, a finance ministry statement quoted her as saying.
The International Monetary Fund (IMF) should provide solutions that are specific to important growth geographies to help alleviate the current conundrum, Sitharaman added.
The finance minister also stated that the IMF should evolve a policy framework that would assess the vulnerability of economies to capital flows and that developing stronger surveillance mechanism with sharper diagnostic tools can mitigate or even prevent the adverse effects on fragile economies.
On the 15th Round of the IMF'S General Review of the Quotas (15th GRQ) likely to conclude without a quota increase, she stated that work on the 16th round should begin in the right earnest and should have a tight timeframe.
Sitharaman later participated in the 100th Meeting of the Development Committee Plenary.
She said that as we draw closer to SDG 2030 (Sustainable Development Goals), India is pursuing both scale and speed of development through large National missions in a fiscally responsible, sustainable and inclusive manner.
These programs range widely from solar energy to direct benefit transfer, and from skilling to sanitation.
“But there is a common approach: to improve incomes, reduce deprivation and enhance living standards,” she said.
Sitharaman also stated that in pursuing investment led growth, we should not neglect sustainability, efficiency and transparency in debt and tax policies.
Moreover, investments must generate domestic revenues that can be channelised into effective public spending in health, education and skilling so that youth can benefit from the economic growth.
The finance minister also encouraged the IMF to guide concerted international action to combat illegal financial flows and welcomed collaboration to push investment to augment multilateral development bank (MDB) financing into developing countries.