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Excerpts from an article first published in esamskriti.com
I read a very interesting article by trade expert Ajay Srivastava in the Business Standard (5/1/26) titled Why the India-US Bilateral Trade Arrangement is taking so long to conclude The author made the following key points –
1. The U.S. has signed trade agreements in Trump2 essentially with countries whose security it guarantees, i.e. UK, Japan, South Korea, and the EU. On July 25, the U.S. and Indonesia agreed to a framework for a bilateral trade agreement. Other exceptions are Malaysia, Thailand, and Vietnam.
2. The FTAs are invariably on U.S. terms. How can Modi and Trump have a trade deal-related call when hard policy choices remain unresolved?
The U.S. wants:
a. Unhindered access to India for its agricultural products.
b. Online platforms like Amazon to sell, like Jio, i.e., stocks based model.
c. To use trade tools for political pressure, e.g., digital rules, data flows, defence purchases.
d. Data for U.S. digital companies to be stored only in the U.S.
e. India not to purchase Russian oil and defence products.
India must remember that:
a. It is the most populous country in the world, with a population of (140 crores plus), representing a huge market for all other countries, the U.S. included.
b. Even though on a lower base, it is growing at 6 to 7% per annum.
c. It has a huge reserve of talent and labor that the world needs.
d. U.S. Investments in artificial intelligence need consumers in India. U.S. AI companies will not have access to China or Russia.
e. It needs capital and technology, which the U.S. can provide.
f. Resident NRIs have to stand with the U.S., even though they remit billions of dollars to India every year and support India’s resurgence.
g. The U.S. is not a reliable defence partner, e.g., GE engines for Tejas. U.S. equipment is expensive and does not involve the transfer of technology.
h. Indian I.T. companies like TCS and Infosys earn large revenues from the U.S. American companies need their services as much as they need the revenue.
i. The U.S. is a huge market for gems and jewellery, shrimps and textiles. India must look to diversify its exports.
j. Indian Pharma exports to the U.S. are generics that keep prices low in the U.S. Any increase in tariffs will increase end consumer prices and inflation. Read 3
k. The U.S. refinery capacity is more for processing hard crude. For processing light crude that the U.S. currently produces, it needs countries like India.
Robinder Sachdev, author of Trumpotopia – A Guide to Decode Donald Trump says Indians must understand how negotiations in the real estate sector happen in New York. The style is setting artificial deadlines, knowing more about the other party than the other party knows about themselves, using the media to build your narrative, having meetings in a setting which intimidates the person meeting, etc.
The U.S. Approach so far
Trump wants to negotiate himself – he wants the other leaders to talk to him and strike a deal (Commerce Secretary’s recent statement). Trump likes strong leaders, who can close a deal and deliver.
What can India do
1. Avoid a public spat with the U.S. President. Let the MEA spokesperson or Commerce Minister respond.
2. Closed the deal at the bureaucrat/minister level.
3. Import corn and soyabean (modified variety) for use in the production of Ethanol.
4. Do not buckle under U.S. pressure. Even if duties increased to 400%, the U.S. will not levy higher tariffs on smartphones and generic pharma products.
5. Continue buying arms from Russia, and reduce the quantum of oil purchased from Russia by developing newer sources other than the Middle East.
6. Recharge commercial ties with China with care.
Trump 2.0 will continue to up the ante until it gets what it wants. India must not give in and continue to work together with the U.S. in areas where there is convergence, whilst developing other markets.
Trump has altered many rules of the game in international trade and geopolitics; only time will determine the success rate.
This full version of this article first appeared on www.esamskriti.com