14:12 GMT31 October 2020
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    Despite amicable personal relations between Indian Prime Minister Narendra Modi and US President Donald Trump, economic ties between the two countries have been on a bumpy ride for the past two years: from the withdrawal of Generalised System of Preferences (GSP) status to India, lacklustre progress on a US–India trade deal to the H1B visa issue.

    As the US presidential election draws closer, Republican candidate and incumbent POTUS Donald Trump will lock horns with his Democratic rival Joe Biden in one of the most keenly observed electoral contests on 3 November.

    Trump's bonhomie with Indian Prime Minister Narendra Modi is well-known, as the two have at least twice shared a stage: first, when thousands of people in Houston joined the chorus of "Howdy Modi" during the Indian PM’s visit to the United States in September 2019, and later during Trump’s maiden trip to India in the reciprocatory "Namaste Trump" event in February 2020.

    For his part, Biden, though known for his critical views on Kashmir and India’s new Citizenship Amendment Act (CAA), said while addressing the Indian–American community during India’s Independence Day celebrations on 15 August that his administration would "stand with India", and if elected, he will "strengthen the bond" between the two countries.

    At a time when the Indian economy, which had already been slowing down before the pandemic, is now completely marooned due to the coronavirus, the outcome of the US election is crucial for India as the big question is: under whose presidency does India stand to gain?

    From over 8 percent in early 2018, India's economic growth slumped to 3.1 percent in January–March of this year, with the US–China trade war being one of the contributing factors. Under the impact of the pandemic, the Indian economy contracted by 23.9 percent in April– June of this year. While Biden is expected to be more sensitive to India's economic and trade issues, the Trump administration has had a prickly attitude toward Indo–US trade ties.

    Trump's 'Hawkish' Trade Policies to Get Worse if He Wins

    Analysts, meanwhile, believe that if Trump is re-elected, his administration will try to get a larger piece of the "trade pie" for itself.

    “India has a trade surplus with the United States above all the major economies, upon which Trump expressed displeasure earlier. Be it Democrats or Republicans, the US always wanted a bigger share of the Indian trade pie and market. But the way in which the US administration approached the issue earlier was very different than what Trump did. It was very unique to Trump. It had nothing to do with Democrats and Republicans. In the pre-Trump rule, retaliatory action on the trade front was never taken. If the Donald Trump administration continues, his hawkish policies are going to get even worse”, professor Biswajit Dhar from the Centre for Economic Studies and Planning at Jawaharlal Nehru University in New Delhi, told Sputnik.

    Dhar added that with the Trump administration in place, one may not even be able to approach the World Trade Organisation (WTO) as he has rendered the WTO completely irrelevant.

    "In a second term, Trump may up the ante and try to get the most out of the partner country in trade matters", said Dhar, adding that if Biden wins he is expected to play by the rules.  

    The Trump administration withdrew Generalised System of Preferences (GSP) status from India in June of last year impacting Indian exports worth $5.6 billion, alleging that Delhi had been imposing higher tariffs on American goods. Under the GSP, the US had been providing duty-free access to around 2,000 Indian products. The issue relating to curbs on the H1B visa also remain unresolved to date.

    Trade Deal Hung Up Despite Trump – Modi Friendship, US to Serve Its Interest

    In November of last year, after India’s withdrawal from the China-led Regional Comprehensive Partnership (RCEP) – a free trade agreement (FTA) between the Association of South East Asian Nations plus six other countries – it initiated trade talks with the US.

    The negotiations aimed at ultimately signing an Indo–US free trade agreement. After several rounds of discussions, the FTA with the US is still in limbo, and even a limited trade deal has not been signed between the two nations despite the Modi–Trump friendship.

    According to data from the Indian Ministry of Commerce, India’s bilateral trade with the US was $87.95 billion. It grew to $88.75 billion in 2019-20. India's trade surplus with the US increased to $17.42 billion in 2019-20 compared with $16.86 billion in 2018-19, as per the ministry data.

    Economists believe that with Trump in the White House, India may have to adjust to Washington's needs, while a Biden administration would "better understand" the Indian position with a vice president of Indian origin, Kamala Harris.

    "In terms of economic impact on India, it does not matter whether Trump or Biden comes to power in the US. Ultimately, it boils down to the business interest. That said, it is a bit of an advantage that the vice president in a Democratic government will be a person of Indian origin. With that we can expect a better understanding of India’s position on trade as well as other issues”, economist N.R. Bhanumurthy, the vice chancellor of the B.R. Ambedkar School of Economics told Sputnik.

    Dhar, however, believes that India will have to be more accommodative on the trade deal front with Trump at the helm, while with Biden it will have to play by the book.

    "We know what the contours of this Indo-US free trade deal will be. India will have to concede more ground to the US and will not be getting anything out of the US. For example, India may have to give market access to the US in the areas of agriculture. Because of the strategic ties that India now has with the US, the former will have to be more accommodative. Trump may have a fair bargain", said Dhar

    "I hope if a Democratic administration comes to power, it may look at some of these problems because it is important that two countries keep talking and find mutually agreeable solutions. I feel with Biden in place, or with anyone other than Trump will prefer to go by the rulebook on trade or any other matter", Dhar added.

    H-1B Visa

    In a major poll announcement – especially tailor-made for the Indian-American community, Biden has promised that if he is voted into office, his administration will reform the H-1B visa system. It will be a huge reprieve for the community, which has a strong vote base of at least 1.3 million in the country. The first-ever policy document for Indian- Americans announced by the Biden side, has promised a family-based immigration system.

    US President Donald Trump in June of this year, issued an order banning the H-1B visa citing growing job losses due to the COVID-19 pandemic. The temporary ban will remain in force until December as per the order.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

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    H-1B, Trade, Joe Biden, Donald Trump, Elections, United States, India
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