The dust is yet to settle on the particulars of the ‘India-US Trade Deal’, which has been worked out between the two governments after some tough negotiations. The announcement made by US President Donald Trump is his usual over the top reading of situations – often not rooted in reality. His claim that India will stop importing Russian oil and, instead, buy from Venezuela (courtesy the US) fails to recognise that it will take India’s refineries quite a lot of time to make the shift technically for the purpose. Also, the claim that India will import $500 billion worth of goods from the US is also an imagined number that has no basis in reality. It is obvious that the US under Trump now views the relationship through a purely transactional lens, where every strategic gain for India requires a massive economic “payback”.
For the Indian consumer, US made goods will become cheaper providing competition to Chinese imports. Tariffs on India of 18 percent give it an advantage over competing nations in the region like China, Vietnam, Thailand, Bangladesh, etc.
India’s opposition parties allege that the interests of India’s farmers and dairy industry have been compromised, with the LS LOP, Rahul Gandhi even claiming that this happened due to pressure of the Epstein files. La La Land notwithstanding, it may be recalled that the ‘deal’ took so long particularly because India was not willing to make any concessions on these sectors.
The fact that a trade agreement was even finalised is quite an achievement because Trump expected a complete surrender. That India stood firm and actually monetized the situation by reaching out to other ‘middle nations’, made it clear that it was not to be bullied. The grand signing of a long negotiated FTA with the European Union will also have shown the US negotiators that going further down the line would only leave them empty-handed.
It must be noted that the manner in which the Indian economy and the people responded to the challenge was remarkable, underlining how fundamentally stronger the nation has become. It is in itself an almost complete economic unit with supply chain resilience, and its dependence on others is in certain sectors dependent on rare earth minerals or monopolistic hold over high technology products.
No doubt, if the ‘deal’ proves mutually beneficial, there will be a strain on established geopolitical relations. Also, as part of the overall US strategy is to find alternatives to China, retaliatory measures can be expected from Beijing. But, first, the reality has to be fully understood.
