‘For global trade’s sake, hope our US deal is inked soon’: FM Nirmala Sitharaman

New Delhi: Finance minister Nirmala Sitharaman Friday expressed hope that the India-US trade agreement would be concluded at the earliest in the interest of global trade and bilateral economic ties between the two countries.

In an interaction with the American think tank Atlantic Council, on the sidelines of the World Bank-IMF annual meetings in Bangkok, Thailand, she also said that China uses non-tariff barriers unhesitatingly and this is the biggest hurdle in the trade between India and China.

Also Read: White House lists investment over $330 billion in US from India


"Recently the Indian commerce minister has also spoken that they expect and wish to have the agreement signed soon. Negotiations have been going on. I hope, in the interest of global trade and in the interest of trade between the two partners, India and US, the trade agreement gets concluded at the earliest," she said on India's trade deal with the US.

Her statement comes after commerce and industry minister Piyush Goyal on Thursday said the first phase of the India-US trade pact has been finalised and is undergoing legal drafting.

Also Read: China says ready to address each other's concerns after Sitharaman flags trade barriers

On trade with China, the minister said that New Delhi has been denied market access, even for those goods for which there are immense market opportunities in China, citing the examples of generic drugs, bovine meat, perishables, and other goods for which huge potential exists there. "I would think a decade has gone by consistently putting up a case for market access for Indian products [in China], but non-tariff barriers have been very strong," she said.

Trade settlements in rupee

"China uses non-tariff barriers unhesitatingly, whether it is in the name of phytosanitary measures or any other for which due investigations with both sides sitting and talking can happen, but no progress is made. So, non-tariff barriers is the biggest hurdle in the trade between India and China," she stated.

She also said that India seeks to promote rupee-denominated trade settlements to assist partner nations facing hard-currency shortages and ensure uninterrupted supplies of essential goods.

Sitharaman said that India had not adopted the approach of imposing punitive tariffs on trading partners to correct large trade imbalances, preferring instead to pursue negotiations, even if the process was time-consuming.

"We sit and talk. It is sometimes very tiresome, but we do go through that approach rather than put countervailing duties, or some non-tariff barriers to counter the non-tariff barriers on the other side, so these are ways in which we find it difficult in correcting the imbalance which prevails between China and us," she said.

New Delhi is not against ASEAN benefitting from their trade, but it is very skewed against India, she said.

However, India would equally want to address concerns which its importers, markets and manufacturers are facing. The two sides are reviewing the agreement, and India wants to carry on with the agreement but in a "slightly refashioned manner," she said.

India's growth

The country has sustained strong growth despite global disruptions and has been the world's fastest-growing major economy over the past four to five years, particularly after Covid-19 pandemic.

Insisting that public spending on capital expenditure has helped India build infrastructure in the country and that has a great multiplier effect which is "different from what it would be if you were to put that money in the hands of the people directly," adding that it has "kept us going very well during these difficult times."

Public spending on infrastructure helped channel money to people through economic activity without putting the same pressure on the fiscal deficit as some alternative forms of expenditure, she said.

Sitharaman added that government borrowing was broadly aligned with infrastructure expenditure, arguing that debt-financed asset creation was benefiting the economy. "Borrowing goes for asset creation, and as a result, the economy has benefited," she said.

"India, much against all odds, is able to keep up the growth," Sitharaman said, attributing it to being inclusive and making sure everyone has access to resources and access to skilling for the young and making sure that fiscal prudence is not lost in this.

She called for reforms at the municipalities and panchayat levels.

Multilateral agencies, global blocs

Sitharaman called for the multilateral organisations be more "nimble-footed," reiterating that "they have to live up to 21st-century expectations because these are Bretton Woods institutions."

They have contributed immensely to keeping the global systems going, financial markets understood, and global financial systems supported. but newer problems such as cross-border, technology-driven payments, cross-border issues, stablecoins or central bank-driven currencies are coming up.

As per Sitharaman, countries in the middle-income group are suddenly dropping into desperate balance-of-payments struggles and need the IMF's help.

"The response can't come years afterwards. They approach you in desperation for help and for nearly three or four years, no solution is given. These kinds of things are getting corrected now," she said.

"During India's G20 presidency in 2023, we took up this issue that multilateral development institutions, financial institutions, the World Bank, IMF and so on, will have to be nimbler footed."

On BRICS, Sitharaman said the grouping should be viewed as a partnership aimed at improving the welfare of its people rather than as a platform to counter any country or bloc.

"I don't think BRICS's intention is to counter others. It is more to strengthen the partnership through the BRICS," she said, adding that the bloc represented nearly 40% of the world's population and cooperation among its member countries could improve trade, foster mutual understanding and expand economic opportunities.

With new members joining the grouping, 11 to 12 countries were actively engaging with one another, collectively accounting for around 45% of global trade, she said.

Local currency trade

India wants to promote trade settlements in rupee to help partner countries facing a shortage of hard currencies so that they continue importing essential goods, she said. "It is a method we have understood and are working on it," the minister said, adding that when countries struggling to access hard currencies often face difficulties in maintaining trade despite their need to import goods, local currency settlements could help address the problem.

Urban focus

At her keynote address on India's Urban Development Programmes under the theme of "Working Together to Make Cities Investable - Mobilising Private Capital for Urban and Water Infrastructure," she said there was a need for market finance.

Public investment remains essential for basic services and inclusion, while market finance can supplement government resources, address project viability gaps and support better project delivery.

"The objective is not to replace public funding, but to use it to address viability gaps, support reforms and mobilise appropriate additional capital that will be required," she said.

While the government has established a public investment framework through national programmes implemented with state governments and urban local bodies, including the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the Smart Cities Mission, and the Swachh Bharat Mission, the next phase must combine public investment with market-linked, reform-driven financing to expand the pool of capital available for urban infrastructure, Sitharaman said.

She said India is looking to deepen cooperation with Germany to finance sustainable urban infrastructure and attract greater private investment.