Not willing to tread the path taken by EU and Asean for market-opening trade pacts with India, Ms Schwab said “Quite honestly, it would be quite difficult, at this point of time for India to imagine doing that kind of a deal with the United States considering its sensitivities in agriculture."

Ms Schwab said the US looks at trade agreements comprehensively and at this stage it is “difficult” for India to do such an agreement. She specifically mentioned India’s “sensitivities” in the agriculture sector and said the US respected those.

Her comments came during the launch of the US-India Small and Medium-sized Enterprises (SMES) Summit here. The summit has been organised by US-India Business Council and the Federation of Indian Chambers of Commerce & Industry (FICCI) to focus on SMEs as an important constituent of bilateral economic relations.

Ms Schwab said SMEs were making a significant contribution to the economic discourse between the two countries and it was important that more attention was paid to them. Commerce Secretary G K  Pillai appeared to differ from Ambassador Schwab on the question of free trade agreement. He said India was negotiating comprehensive free trade agreements with the Association of South East Asian Nation (Asean) and the European Union (EU).

No comparison

Ms Schwab, however, said there was no comparison between her country and the EU when it comes to a free trade pact with India. "EU is not a major agriculture producer, although they do a lot of export of value-added (products). Same thing is with a lot of Asean countries," she said.

Mr Pillai highlighted the contribution of SMEs to India’s economy saying they account for 45 per cent of manufacturing output, seven per cent of GDP, and employed 30 million people. He said 95 per cent of industrial units in India were SMEs that produce 7,500 products accounting for 35 per cent of direct exports and 15 per cent of indirect exports.

The US would closely watch the progress of agreements that India is working on with the EU and Asean. "We will see how those (India-EU and India-Asean) play out," Ms Schwab said, adding that the US follows quite different approaches to such deals. "At some point in future, we could well do it," she said.

Ms Schwab said since the processes of trade agreements were tedious and difficult, the priority for now was to use the alternative ways to enhance the bilateral trade which was at $41 billion last year.