Recently, President Donald Trump concluded a high-level visit along with his family to India. Last year PM Modi was given a warm reception with ‘Howdy Modi‘ in Houston. Now, it was time to reciprocate, and India welcomed President Trump with ‘Namaste Trump’ in Motera stadium, Ahemdabad. President Trump also went to Sabarmati Ashram and tried spinning the charkha as well. This visit had a lot of expectations for Indo-US bilateral relations with the possibility of a major trade deal, along with defence, energy and security deals.
However, no major trade deal was announced. There could be various reasons. The trade relations between the two countries have been passing through rough weather in the last few years. President Trump came to power by advocating that the US needs to renegotiate its trade deals with the various countries as the existing ones were not favourable to America. It started seeing the trade relations in terms of how much trade deficit it had with various countries the trade blocs and started renegotiating these.
For instance, renegotiating NAFTA to USMCA, protectionism, sidelining WTO and signing bilateral deals to favour American trade interests. With America First policy of Trump Administration, the US put unilateral tariffs on India Steel and Aluminium. India retaliated with counter-tariffs. Further, the US withdrew GSP and the developing country status from India.
US has flagged the issue of IPR, labour and environment clauses at different times with India. The USTR has put India in the priority watch list of special 301 report. Apart from these, now the US has further pressurised India to cut off the Iranian oil import, which is the second-largest oil exporter to India. Harley Davidson also remains something that President Trump wants India to lower its duties on imports.
The US is India’s largest trading partner with bilateral trade of more than $150 billion. The trade balance is in favour of India with a trade surplus of around $20 billion. This trade imbalance is small, looking at the total trade. The bilateral trade has doubled in the last 10 years, and there’s a potential of the trade doubling in the next five years. India has taken steps to correct the trade imbalance by enhancing its oil and gas imports from the US.
Moreover, the trade can’t always be seen in terms of trade deficit. More importantly, it’s about how the two countries are connected in the global supply chain. The US further wants market access to its dairy products, and strong IPR to benefit its pharma industry. Also, as the US presidential election is coming later this year, President Trump does not want to be seen as signing some trade deal that does not sync with his poll agenda.
However, both the countries have agreed that the progress is going on, and it will take some time for a big deal. India would want the GSP status and the restoring of the developing nation status. Even President Trump has said that PM Modi is a tough negotiator. Even India has to protect its interests, and we can hope for a sound trade deal soon.
US-India signed a $3 billion defence deal to give India 24 state of the art MH-60 Romeo helicopters and Apache Helicopters. These will enhance India’s defence capabilities as they are highly advanced multi-role helicopters with torpedoes to destroy submarines. Further, MOUs were signed on Health and LNG. India is looking to import more oil and gas from US and cooperation to build LNG (liquefied natural gas) infrastructure.
However, the agreement for Indian Petronet investment in American gas company Tellurian could not be finalised. Both countries have come together to counter terrorism, cybersecurity, and maintain the rules-based order in the Indo-Pacific region. Though the central idea of Indo-Pacific could be seen differently by the two countries. The Blue Dot network, in response to BRI (China’s Belt and Road Initiative), is another area where there’s more scope for cooperation.
However, there are some areas where the issues need to be resolved. India wants the progress on H1B, L1 visa issue, Totalisation agreement, Civil Nuclear Energy cooperation between Westinghouse and NPCIL, etc. India further wants DTTI to progress so that there is a meaningful technology transfer to India to enhance India’s defence industry capabilities. CAATS would also be a hurdle for India to deal with Russia, which a major defence partner of India, and more so in the context of S-400 deal. India also does not want to be sidelined in the Afgan Peace Process, which is going through a lot of uncertainty.
There are various platforms for both countries to progress and resolve the disputes. QUAD, JAI, Blue Dot, Energy, etc., are few of them. India has and should further maintain the strategic autonomy to pursue its national interest. We need to maintain the relations with the US, Russia and China on even keel to maintain strategic autonomy, maximise national interest and progress for more peaceful and rules-based world order.