Limited room for trade deal with u.s.
Indian and American trade bureaucrats are scurrying around, trying to put the finishing touches to a trade deal ahead of US President Donald Trump’s likely visit to India next month. At stake for India is much needed relief from a possible worsening of its tit-for-tat trade war with the biggest global power and for Trump, a ‘deal’ to brag about ahead of the US presidential election.
The American president needs the deal to look good and satisfy his voters in the American rust and wheat belts—large tracts with a dying US manufacturing sector and a highly subsidised farming business. Voters from these areas were promised that America would be made great again by getting the rules of global business rewritten and the administration knows that deals with China and India are vital to at least make it seem that these promises are being kept.
The Narendra Modi government too is likely to gain by way of the renewal of GSP or duty-free import privileges to more than 2,000 categories of Indian products into the US. India knows Trump’s imperatives and has consequently offered, in return for US concessions, huge duty cuts in goods ranging from strawberries, apples and almonds to high-end mobiles, smartwatches and electronic gadgets. However, the US administration is asking for more. It wants concessions either for American entry into the lucrative Indian dairy market or the poultry market. Indian farmers and businesses dependent on these sectors are dead against any sops that could hurt them. Their Swadeshi cry seems to have found resonance with the powers that be.
The US trade negotiators, who are coming back to Delhi next week for finalising the pact, are however adamant that more sops are needed—if not in farming, then at least in the solar business, which everyone believes would be the next black gold. India, which wants to grow its own solar industry, is loath to allow trade concessions that would let multinationals dominate it for years to come. However, Trump has to look good ahead of elections and the Indians know it. The question Indian negotiators need to ask themselves is how much more they can afford to give, given the country’s own grim economic forecasts.