Ifs & buts beset India-US trade deal

IS the conclusion of a trade deal between India and the US imminent? Have all the outstanding issues been resolved? One has stopped counting, but there has been a virtual cascade of reports claiming that a deal is round the corner over the past six months. However, the two sides have not yet succeeded in turning the corner.

What about the additional 25% tariff imposed on India on account of its purchases of oil from Russia? Now that major private sector buyers of oil are cutting back on purchases from Russian oil and gas majors Lukoil and Gazprom, which are now under US sanctions, would the additional 25% tariff imposed on India be removed? There are no signs of that so far.

Some observers derive hope of an early resolution from the renewal of the India-US Defence Cooperation Framework for another 10 years by Raksha Mantri Rajnath Singh and US Secretary for War (‘Defence’ is out!) Pete Hegseth on the sidelines of the ASEAN Defence Ministers Meeting Plus in Kuala Lumpur on October 31. It would appear that defence hardware and technology cooperation between the two countries remains intact. Perhaps that may be due to the US earning billions of dollars in hardware supplies to India. For a President constantly on the lookout to make a buck, this is in a separate compartment. But India needs to be careful.

At a future date, could Donald Trump object to India continuing to purchase sophisticated weapon systems from Russia, for example, the S-500, and refuse to supply some items or components to India? It’s possible. After all, one did not foresee the oil sanctions.

India has been singled out for punishment on account of purchasing oil from Russia even though China is a larger buyer and NATO allies Turkey and Hungary are also significant importers. After the recent talks between Chinese President Xi Jinping and Trump in Busan on the sidelines of the APEC summit, the latter confirmed that he had not raised the issue of Chinese purchases of Russian oil.

So, India is being penalised because Trump believes it has little leverage but he dare not object to China’s imports because Beijing can retaliate and has demonstrated its willingness to retaliate even if it has to endure some pain.

If India believes that its strategic partnership with the US helps in countervailing the Chinese challenge, it may need to think again. Not that the structural confrontation between the No. 1 and No. 2 powers will diminish in any way, but the tactical accommodation between them will shrink India’s room for manoeuvre. This needs to be acknowledged and addressed through agile and well-considered diplomacy.

An argument has been made that Trump’s recent swing through Asia, the reaffirmation of alliances and partnerships, means that America’s Indo-Pacific strategy remains valid. But the one component of the strategy which is of relevance to India — the Quad — seems to have fallen off the radar. It seems unlikely that the Quad summit will take place in India before the year- end, as originally scheduled. Trump did not mention the Quad during his Asia visit. But more importantly neither did the other Quad partners — Australia and Japan. Perhaps they sensed Trump’s indifference to it.

If India is looking for a ‘Triad’ instead of a Quad by intensifying its cooperation with Australia and Japan what would be its prospects? This needs cautious probing.

What other coping moves are available to India? An obvious one is already being pursued. This is a much closer all-round partnership with Europe, both bilaterally and through the European Union. Both sides appear focused on getting a trade agreement through before the end of the year. If Europe is serious about a major expansion in its defence capabilities, then it will need scale, highly qualified manpower and a predictable and growing market. India could provide all three. A stronger defence partnership with Europe will also hedge against the unpredictability of the US as a defence partner for both sides. This ought to be a no-brainer.

I will repeat, like a broken record, the urgent need to secure our own sub-continental periphery. Not only through priority to bilateral relations with our neighbours but also through focusing on the regional dimension. The neighbourhood is not an irritating distraction. It is a missed opportunity. India must endeavour to become the engine of growth for South Asia and its chief security provider. Eventually this must include Pakistan in the calculations, however remote and difficult it may seem at present. The bigger challenge facing our region is climate change and a looming ecological crisis, which can only be addressed through regional collaboration. Only India can lead such collaboration.

Last but not least, India must consolidate its engagement with East and South East Asia. Its already considerable political and security profile must be matched by a solid economic pillar. Whether this involves re-engaging with the Regional Comprehensive Economic Partnership (RCEP) or a bolder application to become a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), should be the subject of serious policy discussions.

India has obvious strengths. It is still the fastest-growing major economy in a slowing global economy. It is an expanding market. It has enviable political stability in a turbulent world. It has an unmatched pool of scientific and technical manpower, including in the field of artificial intelligence. These are significant levers which, if used intelligently and with confidence, can advance India’s interests and expand its strategic space. This applies to India’s relations with China which are on a gradual upswing, and this should continue. Strategic autonomy is a question of intent, not of capacity.