Trump-Modi: Trade-Offs Will Determine Geopolitical Play

The mid-week Trump-Modi summit will address multiple complex issues. It will, expectedly, focus on USA’s threatened tariff wall and onslaught on immigration policies, which could derail both Indian merchandise and software exports, and try to gain favourable outcomes through a combination of tariff cuts, military and oil purchases.

But more importantly, the summit is likely to tackle two key geo-economic concerns. The first is the ‘free world’s’ effort to retain technological supremacy in nuclear and emerging technologies, which will drive the fifth industrial revolution.

The second is managing the vital Indian Ocean rim, where China has been making calculated advances, especially in the light of the regime change in Bangladesh, which has brought Islamists to the fore in Dhaka — who could align with China — and the need to counter Chinese plans in Myanmar, Sri Lanka and Pakistan’s Gwadar.

India’s pre-summit signal that it will relax strict laws that were holding up global commerce in nuclear power, is among the sweeteners that are expected to help India clinch vital geo-political deals with both President Donald Trump’s administration in Washington and French President Emmanuel Macron.

Its All About Nukes, Baby

Long-stymied plans to set up nuclear power plants by France’s Electricite de France (EDF) and USA’s General Electric (GE) and Westinghouse, as well as future plans for the development of small nuclear reactors, are expected to get the green signal during or soon after the trip.

France’s plans to set up a 990 MW nuclear power plant at Jaitapur in Maharashtra’s Ratnagiri district has long been held up, as are plans to buy nuclear power plants from the US, on account of India’s Civil Liability for Nuclear Damage Act 2010 on the one hand, and the US law — Code of Federal Regulations of the US Atomic Energy Act of 1954 — on the other.

While India’s law on civil liability imposes stringent penal conditions on equipment suppliers in case of damage to a nuclear plant, the American law prohibits US firms from manufacturing machinery needed for a nuclear power plant outside the USA.

India has already indicated it will amend its liability law to boost foreign and private investments in its civilian nuclear energy sector. Not only is India expected to allow EDF to go ahead with the much-delayed Jaitapur plant — touted as the biggest nuclear power plant in the world with extremely low carbon emission — but also to open up cooperation between EDF’s subsidiary NUWARD, specifically created to develop small modular reactors (SMRs), and Indian energy firms.

Besides, France and India are expected to continue cooperation on the Jules Horowitz Research Reactor (JHR) "for the development of nuclear technologies and will enhance their exchanges".

Ahead of Modi’s planned trip, Finance Minister Nirmala Sitharaman said that the development of at least 100 GW of nuclear energy by 2047 is essential for the country’s energy transition efforts. India currently has about 6.9 GW of nuclear capacity in operation, with about 5.4 GW under construction.

The state-run Nuclear Power Corporation of India (NPCIL) has already drawn up plans to set up, manage and operate 220 MW plants for private players. The government aims to operationalise at least five domestically developed SMRs by 2033.

The Tata Group is believed keen on the plan, and has already stated in a filing before the BSE on February 4, that, “As the government seeks active partnerships with private players, and amends the Nuclear Power Act to facilitate nuclear energy expansion, we will pursue opportunities to establish small modular nuclear reactors.”

Officials said India wants SMRs, which have a capacity of up to 300 MW — roughly a third of the generating capacity of a traditional nuclear power plant — to be set up to decarbonise steel and cement industries, as also to supply electricity to power-guzzling data centres and chip making plants, which are planned to be set up in India.

Globally, SMR technology is an area where every major nation is engaged in a race. China and Russia are both leaders, with Beijing investing heavily in SMRs. China announced in July 2019 the launch of a project to construct an ACP100 reactor at Changjiang, where two operating CNP600 pressurised water reactors (PWRs) are already in existence.

Till date, the West’s SMR designs are costly alternatives, and are unlikely to become popular without the low-cost research and manufacturing that a country like India could bring to the table.

Take On DeepSeek

The West, which has been the global leader in cutting-edge research, is facing a crisis moment with China unveiling several AI platforms at a fraction of the cost at which the former could create any of theirs.

The US, as well as other Western powers, now need a degree of cost-effectiveness that another Russia or China alone can bring in. The only cheap, third-world nation with sufficient computing and AI heft is India.

New Delhi knows that, and is willing to bring it to the bargaining table, in return for easier supplies of vital chips and raw materials. The US had brought in sweeping restrictions meant to starve China of vital resources in AI, but the same restrictions have choked India too. Modi’s team is expected to seek relaxations that could help fuel India’s own plans to set up fab plants and its own AI infrastructure.  

Indian Ocean Backyard

The US and France have vital stakes in the Indian Ocean area, and have long been collaborating with India to manage this “backyard”, as Beijing breathes in heavily in the region with its string of strategic ports — from Kyaukpyu in Myanmar to Cox’s Bazaar in Bangladesh, Hambantota in Sri Lanka to Gwadar in Pakistan.

Several developments in the region — from the success of regional armies against the Myanmar Army, to the rise of militant Islamists in Dhaka, and China’s attempts to use chequebook diplomacy to influence small island states in the Indian Ocean — need to be managed, and Modi is expected to discuss and carve out a joint strategy on that with Trump and his team.

In the past, America has see-sawed between a desire to micro-manage the region without a full understanding of local issues — leading to spectacular disasters in Vietnam and Afghanistan — to letting India or some other nation be its chosen local “policeman”, in a bid to cut costs, while remaining in control, albeit loosely.

Though Trump is erratic and hard to predict, many believe he will interfere less and allow allies greater say in their "regions". On the main, over the last two decades, US policy — as far as strategic diplomacy is concerned — was that India should lead the way in South Asia, especially involving countries like Nepal, Bangladesh and Sri Lanka.

The US considers India to be a natural ally in its pivot towards Asia, and has consequently been wooing it for over two decades.

However, in its military, economic and technological competition with China, it often frets that New Delhi may prefer to stay neutral, while playing both sides against each other.

The US’s frustrations with getting India and Japan — two members of the Quad — to commit to bigger roles in the defence of the Indo-Pacific region, possibly goaded it into forging another defence arrangement with the UK and Australia — AUKUS — to take on China's emerging might. 

The formation of the AUKUS represents a dilemma for India too. Should it share the burden of containing China, or pass it on? Can it risk the ire of a great power on its border, and depend on the friendship of a geographically distant power that does not have a great record of supporting allies militarily in their hour of need? 

In recent months, India has signed a tenuous border deal with China, where the two sides will see their armies end face-offs in the high Himalayas, leading to the deepening of doubts about its intentions vis-a-vis the West.

In the past, Trump has himself supported the Quad — ie, the quadrilateral security dialogue between Japan, Australia, India and the US — viewing it as a counterweight to China’s growing strength. Perhaps, he too may take the opportunity of a grand trade-off with India in ensuring its security, by making the “blushing Indian bride” come with greater commitments to be on the West's side.

This completes our series on the Trump-Modi summit. You can read Part 1 : Trump-Modi: More Tariff Cuts, More Oil, Defence Purchases, here

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