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India will have to wait to take forward its discussion with the US on the long-pending totalisation pact and restoration of GSP benefits for Indian exporters at least till the forthcoming US presidential elections are over and even beyond but it will continue pursuing the matter, Commerce & Industry Minister Piyush Goyal has said.
“This would not be the appropriate time when they are almost at the cusp of their elections. Both these issues (totalisation pact and GSP restoration) were flagged off in today’s meeting which was more of an informal meeting as we were not working on an agenda today,” Goyal said at a press briefing in Washington DC on Thursday after his meeting with US Trade Representative Katherine Tai.
Social security pact
A totalisation agreement, also known as a social security pact, exempts short-term expat workers in either of the partner countries from contributing to the social security schemes of the host country. India has been long pursuing a totalisation pact with the US as it could help save Indian companies operating in the US, especially IT companies, an estimated $4 billion or more annually in social security contributions in the US.
“This is a subject that should have been sorted out many years ago when the number was small, and the impact was manageable. Over a period of time, it was neglected by several governments in India. Now, the dimension of the money collected by the Treasury is so large that for any government this will be a major decision,” Goyal said.
India will continue to have the dialogue with the US but it is going to take time, he added.
India already responded to the detailed questionnaire on the social security systems in India sent by the Biden administration. “The social security coverage details that we have shared with them, cover about 930 million people in India, more than the required threshold. So we are eligible for a dialogue and resolution of totalisation and bringing in Social Security Agreement,” he said.
GSP scheme
On India’s demand that the US should restore the GSP scheme for Indian exporters, the Minister said that it could be pursued only when a new Congress was in place, and one would have to work with the ‘ways and means committee’ of the Congress.
The GSP programme, initiated by the US in 1974, grants duty-free access to specific products from developing countries. In June 2019, the Trump administration withdrew the GSP scheme for India. India was the largest user of the program, accounting for $5.7 billion in exports under GSP in 2017.
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