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Prospects for a Trade Deal with India

02/17/2020

President Donald Trump will visit India during the last week of February where he will discuss a trade deal  with Prime Minister Nahendra Modi. India has agreed to reduce the tariff on chicken legs from 100 percent to 25 percent and is interested in other agricultural commodities.

 

India has a long history of protection of domestic industries and farmers and has an exceedingly bureaucratic and socialistic government. Ambassador Gregg Doud, of USDA, is skeptical that any deal could be concluded and if so would result in meaningful imports, especially of dairy products. Doud commented, “I have met a lot of protectionist industries and protectionist countries in the world. I do not think I have ever met anybody as protectionist as India.”

Although the potential market in India would appear to be immense, it must be remembered that almost half of the population lives in poverty and the dietary customs associated with various ethnic groups place restrictions on acceptability of animal protein. Apart from the bureaucracy, the judicial system is rigged in favor of local litigants and the level of business ethics is variable, especially with regard to local representation, joint ventures, and contracts.