India, US closing in on package deal to remove trade irritants

NEW DELHI: Indian farmers and U.S. manufacturers of medical devices could be among the main winners in a trade package under negotiation, as Washington and New Delhi look to remove long-standing irritants to ties, sources familiar with the talks said.

Having skirmished for months over tit-for-tat tariffs on steel and some agricultural products, the two sides began talks in June that also cover India´s concerns over U.S. steel tariffs and U.S. problems with Indian tariffs on imported IT equipment.

"We are closely negotiating a discrete package of trade issues.

It will amount to a pretty substantive agreement," said a source with knowledge of the negotiations.

Neither the office of the United States Trade Representative or India´s trade ministry responded to a request for comment.

The source said the two sides expected to close the deal in the next few weeks.

U.S. President Donald Trump, who dislikes multilateral trade agreements, said earlier this month that India had approached the United States to "start doing a trade deal," without giving any details.

The current discussions, however, are focussed on removing outstanding sources of friction, and are not aimed at creating a bilateral free trade agreement, sources from both sides said.

Having already waded into bigger fights with China and the European Union, Trump has previously called out India for unfair trade practices.

At an estimated $126 billion, U.S. goods and services trade with India last year was less than a fifth of its trade with China.

Unlike some other countries India failed to be given a waiver after the Trump administration imposed new import tariffs on steel and aluminium imports in March.

New Delhi retaliated by raising tariffs on a number of U.S. products but has held back from implementing them while it negotiates a package to soothe ties.

The tariffs were to go into effect from Monday midnight but the government issued an order saying these had been deferred until Nov. 2. "Our relationship with the U.S. unlike many other nations has not deteriorated," said an Indian government official involved in the talks.

"But if you think relations have become very friendly with a lot of bonhomie, I don´t think that has happened either."

U.S. companies are hungrily watching an Indian economy that is growing at more than 8 percent, as they seek presence in a market that has potential for massive growth.

One of the most prominent trade issues to erupt during Trump´s presidency has involved India´s treatment of medical devices imported from the United States.

Last year, U.S. exports of medical devices and equipment to India totalled $863 million.

India last year equated high profit margins of medical device makers with "illegal profiteering", capping prices for some heart stents - small wire-mesh structures used to treat blocked arteries - and knee implants, to help poor patients.

That measure provoked a storm of criticism from U.S. companies, such Abbott Laboratories, Johnson & Johnson (J&J) and Boston Scientific, which said such controls hurt innovation and future investment plans.