India-US Trade Deal: A Work In Progress

The exporters from the MSME sectors have heaved a sigh of relief, as the reduced tariffs on Indian goods will boost trade and safeguard employment. But they should remain cautious. Diversification is still the mantra. 

There will be no sudden or disruptive entry of foreign products into the Indian market, nor the opening of any market segments that could affect Indian farmers; all the major crops, food grains, fruits, and dairy products remain shielded.

What It Means To Domestic Farmers

On the confusion triggered by a recent tweet from the US Treasury Secretary about increased access for American farm products, India has not opened its markets in any way that puts pressure on domestic farmers, and the protections for key agricultural commodities remain intact.

India already exports rice to many countries, including the US, with exports recorded at about ₹63,000 crore. Reduced tariffs will directly benefit India’s rice, spices and textile exports, and growth in textile exports will help millions of cotton-growing farmers. Politically sensitive agricultural segments, with staples such as rice, wheat, soya, and corn, have been kept out of the agreement

The target of $500 billion bilateral trade, which the US President announced following the trade deal, will mean more exports as well as sourcing. Indian orders with Boeing were in the range of $70-$80 billion, and once parts and related components are added, the total value could cross $100 billion. India will be buying items such as oil, gas, aircraft, laptops, smartphones, and data centre equipment from the US.  

New Delhi-Moscow Ties

However, this should not give the impression that India is compromising on its concept of strategic autonomy. The erstwhile Soviet Union and Russia have been India’s all-weather friend over the last five decades. No other relationship between the major powers has been as steady as the New Delhi-Moscow strategic partnership.

Any analyst with a deep understanding of India’s foreign policy will agree that India will not surrender in its choices and preferences.   

In an article titled The Trump-Modi Trade Deal Won’t Magically Restore U.S.-India Trust, which was published in the Carnegie Endowment for International Peace, Evan A. Feigenbaum wrote, “I also have a hard time believing the government of India will make any Russian oil-related commitment explicit. After all, India has deep historical and sentimental ties to Russia that it will not simply ditch under American pressure. Maintaining the symbolic hedge that it can purchase Russian oil if it so chooses speaks both to Indian foreign policy autonomy and to its ability to resist American coercion, both of which are important factors in India’s domestic politics.”

“Washington and New Delhi are in a better place than they’ve been since August. Both leaders should take the win. But it’s still worthwhile to take a deep breath, check the euphoria at the door, and see where we go from here,” Feigenbaum wrote. 

Diversification Strategy

The events of the last year are a stark reminder that no country, big or small, can afford to put all eggs into one basket. India, as an emerging power, cannot, and should not, get tied up with one geography or one big power.

India’s success will lie in its independent choices, and in pursuing these choices steadfastly without any fear or obligation. A civilisational state like India has to chart its own destiny not only through collaborations but also self-pride — not borrowed pride.    

(The writer is a commentator on geopolitics. Views are personal.)