India-US Get Ready For Trade Talks

Brendan Lynch, the US trade representative for South Asia, is in New Delhi to meet senior Indian officials and prepare the grounds for the next round of bilateral trade negotiations. Lynch is here just for a day.

"This is not an official 'round' of negotiations but it will definitely be a discussion on the trade talks and on trying to see how we can reach an agreement between India and the US," Rajesh Agrawal, who leads India's negotiating team in the US trade discussions, told reporters.

Both sides are hoping that an agreement could be signed and sealed by November. However it is too early to be optimistic.

Today’s talks between Rajesh Agarwal and Brendan Lynch, will be basically to "touch base’’ after over a month of angry rhetoric from Washington. The tirade started at the top with President Donald Trump and echoed by his key Cabinet appointees like Peter Navarro his senior counselor on trade and Howard Lutnick, the commerce secretary. Navarro had referred to the Ukraine war as "Modi’s’’ war. His point was that by buying discounted Russian oil India was fuelling the Russian war machine. Yet not a word on China that buys more Russian oil than India.

According to sources in the government, buying of Russian oil will not come up in the trade discussions, but will be talked through at the diplomatic level on both sides.

All through August, the Trump administration had been unsparing in its criticism of India, in an effort to browbeat India in the tariff negotiations. But Trump’s tone softened in September as he referred to Modi as his `good friend.’ India’s Prime Minister reciprocated amicably, setting the tone for a breakthrough of the stalled trade negotiations.

The 50 percent tariff that Washington had slapped on Delhi – 25 percent initially and a further 25 percent for lifting Russian oil, had come like a bolt from the blue. While Modi and his ministers refrained from comment, the MEA in a statement dubbed the US action as "unfair, unjustified and unreasonable,’’ and reiterating that "India will take all actions necessary to protect its national interests.’’ The MEA pointed out that Europe continued to buy oil from Russia and the US itself imported certain items from there.

India’s Strategic Messaging

Moreover India also sent in a subtle message to the US by attending the SCO summit in China. Modi would have travelled to China anyway, as both countries had reached an agreement last October on patrolling arrangements in Depsang and Demchok leading to disengagement on friction points of 2020. However the pictures of Modi relaxed and in a huddle with Russian President Vladimir Putin and China’s Xi Jinping, led to accusations in the US that Trump was pushing India into the China-Russia camp.

India-US ties had blossomed over strategic interests on China’s rising clout in the Indo-Pacific. The Quad, a grouping of India, US, Australia and Japan was precisely to contain China. All this possibly came into play as Trump softened his stand on India.

India going into Bilateral Talks with Eyes Wide Open

New Delhi is going into the trade talks with caution as it tries to protect its people’s interest while negotiating the bilateral agreement. The tariffs have hurt some of the most vulnerable sections in the country. Handicraft, gems and jewellery, textiles and marine exports have been hit hard by the US tariffs. Washington is pushing for the opening up of India’s farming sector.

Analyst Ashok Malik, chair of the India Practice at The Asia Group, is hopeful that a bilateral trade deal can be worked out. He had told Outlook earlier that ``There is a very good Indian offer on the table, giving the US unprecedented market access and tariff concessions. It can be the starting point for a multiphase trade agreement and economic partnership. The US trade negotiators recognise that. Logically, political clearance should come at some point.”

Others however believe that with the Trump administration nothing can be taken for granted. Exporters are keeping their fingers crossed that the negotiations are successful.