India and the US agreed during President Donald Trump’s visit on the expeditious conclusion of the legal text for “phase one” of a trade deal that will lead up to a larger bilateral trade agreement, people familiar with developments said on Thursday.
The two sides hadn’t been able to bridge differences to come up with a widely anticipated limited trade package ahead of Trump’s visit during February 24-25. At a news conference on Tuesday, Trump had held out hope for a trade deal by the end of the year.
The people cited above, who spoke on condition of anonymity, said a fair amount of time during the discussions between Prime Minister Narendra Modi and President Trump had been devoted to trade issues, and the two sides had agreed to freeze the understanding that had been reached so far in current negotiations.
“We will give legal shape to the understanding on an as is, where is basis and come up with the legal text as early as possible,” said a person, who said no timeframe had been set for either the “phase one” of the deal or the final and larger agreement.
“We are looking at the early conclusion of phase one, and then a larger bilateral trade deal,” said the person cited above.
The approach adopted by India and the US is similar to the one taken by Washington and Beijing to tackle their trade differences.
The people noted that the value of India-US trade was expected to grow from $114 billion during 2016-17 to almost $160 billion in 2020-21, while the deficit had declined by 19% from $30 billion to about $24 billion.
The most significant increase, they noted, had been in India’s energy purchases from the US, which had risen from $4.7 billion in 2017-18 to $7.1 billion in 2019-20.
The proposed agreement would require some changes in US laws and rules, including provisions related to social security coverage in the home country of the professionals and the requirement of reciprocal arrangements for US citizens in the home country.
The total amount involved in the matter is about $12 billion, the people said.