US secondary tariffs on India ‘unfair’ but alignment with America much deeper than that with China, says USISPF president Mukesh Aghi

Edited excerpts:

India-US trade deal negotiations have met several roadblocks. What is your sense of the deal and its wider implications for bilateral ties?

You have to understand that the relationship between the two countries is not just about the trade deal. It’s about geopolitics, technology, students, and people-to-people relationships. And so the trade deal will happen, both sides will find a solution to ensure that $200 billion of trade continues and grows, as was envisioned by Prime Minister Narendra Modi and US President Donald Trump, to $500 billion. So, it’s just a matter of finding the right time, and you can see some of the stuff coming out of the White House… They are realising that imposing a secondary tariff may not have been the right approach to deal with India.

The secondary tariffs are being seen as a setback for India. Do you believe the US will ultimately respect India’s sovereign decision?

The secondary tariffs on India are unfair, and to use Russian oil as an issue, I think, is not the way to move forward, because the (import of) Russian oil (by India) was in agreement with the US government… I don’t think that’s the way you deal with nations. Earlier, India used to buy a large chunk of its oil from Iran and Venezuela. When the Trump administration asked India to bring down imports, India agreed. So, it’s not like India is being uncooperative. I think all we’re seeing is that you need to have a conversation, not a coercive tariff diplomacy. Because India is a sovereign nation, a proud nation, and you can’t treat it as if it’s a small country somewhere in a foreign land. And so, I think that’s where we have to bring mature diplomacy to deal with the current situation.

Agriculture has been a priority for India. Do you see the US respecting the red line going forward?

Absolutely. I think when you look at the trade deal, which is on the table, where both sides agreed, and when it went to President Trump, it did protect India’s interest in agriculture and dairy. So, I don’t think that was the issue. So from that perspective, I think the US respected India’s red lines and wanted to move forward, keeping in mind that agriculture and dairy are off the table.

How do you think India’s relationship with China will shape India-US ties going forward?

The alignment between the US and India is much deeper and broader than potential alignment with China. It will never treat India as an equal partner. India exports roughly $15 billion worth of goods and has a deficit of over $100 billion with China. Indian exporters will not get much access to the Chinese market. That’s a very difficult market. So, from every aspect, either geopolitically, economically, or technologically, China will never treat India as an equal. In fact, we have a territorial dispute with China. They want to claim Arunachal Pradesh as their land. So, I think the differences are just too vast, whereas with the US, in every aspect, there is an alignment. And I think the breakdown is not with the community of America. It is more with the White House, and America is much bigger than the White House. So, from that perspective, the relationship will get repaired. It’s just a matter of time. The temperature needs to be brought down, and so both sides can sit and come up with a win-win value proposition.

What are you picking up from businesses? A lot of side deals between India exporters and US importers are happening to preserve relationships.

I’ve talked to 60-70 US CEOs in the last few weeks, and they are not reducing their investment or commitment to India. That continues. From an Indian exporter’s perspective, I think depending on which segment you’re looking at, there is an adjustment taking place, give and take on both sides, because the partnership is important. We are seeing that basically, the trend of trying to accommodate and maintaining the relationship is also moving along very well.

There have been signals from both sides to bring the temperature down. What is the status of backchannel communication?

There are backchannel conversations taking place, and people are basically working to restore the relationship and get the trade deal going. Because I think a trade deal is important for the US and for India too.

There are fresh concerns in India over US commentary on curbing H1B visas, which could hurt the India-US relationship further…

About 70 per cent of the H1B visas go to Indians. And when you look at it, most of them are hired by US companies and not by Indian companies, and it’s a lottery-based system, which I think is not fair to more qualified people or people who are getting higher compensation. Reforms will drive higher salaries for Indian workers. So from that perspective, this reform would be good, because today, the average worker on an H1B visa earns around $66,000 compared to the average per capita income of America, which is around $75,000. So, I think this should drive and benefit Indians more than anybody else.

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