India petrochemical sector upbeat on better US relations under Biden

MUMBAI (ICIS)–India’s petrochemical industry players are upbeat that economic relations with the US will improve under President-elect Joe Biden.

“Under the Biden-[vice president-elect Kamala] Harris leadership, the Indo-US economic ties would go from strength to strength, getting deeper into areas of advanced scientific research and development, business-to-business cooperation in strategic areas,”’ said Deepak Sood, secretary general of the Associated Chambers of Commerce and Industry of India (Assocham), in a statement.

“With rising trade and investment ties between the two countries, the health of our economies are inextricably linked and we must work together during this critical time,” Uday Kotak President of industry body Confederation of Indian Industry (CII) said on Twitter.

The US was India’s top export destination in the fiscal year 2019-20. A total of $53bn worth of Indian goods went to the US, while imports stood at $35.7bn.

India expects this trend to continue into the new presidency, said a senior official at the Ministry of Commerce.

“It is too early to figure out the new [US] President’s international policy or economic decisions. But going by past US-India relations, the USA could favour an approach that is favourable to India,” he said.

Biden is expected to boost trades between the two countries, and possibly restore India’s status among the US’ trading partners that enjoy preferential tariffs under its Generalised System of Preferences (GSP).

Incumbent US President Donald Trump had removed India from the GSP list in June 2019, removing the trading perks the south Asian emerging economy had enjoyed since 1974.

“Prior to the economic disruption caused by COVID-19, bilateral trade in goods and services in 2019, reached a peak of nearly $150bn,” CII director general Chandrajit Banerjee had said in a Twitter post on 8 November.

“We can aim higher to our shared goal of $500bn through a new era of revitalised economic cooperation, which would be comprehensive, complementary and collaborative,” Banerjee said.

It may also be easier to do business with a US administration headed by Joe Biden as he is deemed more “trade-friendly” compared with Trump, industry sources said.

“Joe Biden believes in institutions. The Indian industry can expect a level of predictability in the trade regime with Joe Biden as President of the USA,” said a member of the Federation of Indian Export Organisations (FIEO).

India is in the process of diversifying sources of goods as well as boosting domestic production as part of a strategy to reduce dependence on Chinese imports.

“The US is also affected by the China challenge. China has huge economic and technological heft and to create a less China centric supply chain, the US may look towards strengthening business ties with India,” the commerce ministry source said.

As a result of stepped-up efforts to reduce heavy reliance on imports from China, India’s overall intake of Chinese goods in the first four months of the current fiscal year declined by more than 29% to $16.6bn.

India’s imports of 45 out of 50 principal commodity groups from China, including chemicals, had declined in the April-July 2020 period, based on latest data available from the Directorate General of Commercial Intelligence and Statistics (DGCI&S).

Fertilizer imports from the northeast Asian country fell nearly 38% over the period to $361.20m, while organic chemical imports fell by more than 14% to $1.07bn.

India’s economy is currently reeling from the effects of a prolonged pandemic-related lockdown, which are reflected in slumping trades.

In the seven months to October 2020, overall exports were down 19% year on year at $150bn, while imports slumped 36.3% to $182.3bn.

Focus article by Priya Jestin

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