PM Modi with US President Donald Trump when the latter visited India in 2020. (ANI)
US President Donald Trump may have doubled the tariffs on India to 50 per cent, but New Delhi is not alarmed or unduly perturbed; rather the government seems to be prepared to wait it out for the next few weeks or more — deal with his increasing frustration by remaining calm.
Simultaneously, it has taken an unequivocal call that Trump cannot tell India not to trade with Russia or distance itself from BRICS.
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“These are India’s sovereign decisions. We will never sacrifice our sovereignty,” said a source aware of the developments. “We are willing to negotiate on tariffs and trade with the US, but Trump has continuously shifted the goalpost. Buying defence spare parts or oil from Russia, which is India’s all-weather and consistent friend, or being a member of a global grouping like BRICS – these are issues which are not related to trade with the US and are non-negotiable,” the source said.
India is one of the first few countries to have kick-started talks with the US on a trade agreement, and an interim deal was expected before August 1.
“We were progressing really well and were very close to a deal,” said another source. “Yes, there are red lines given the nature of our economy. Agriculture and dairy concern the livelihoods of a large population of poor farmers; there is little to no flexibility in opening up these sectors,” the source said.
“But our negotiators are taking part in the talks with the US in good faith and with authority – when we concede on a particular subject, we stick to it. It has not been the same on the part of the US. It has happened that US officials agreed on some issue, but then changed their stance due to lack of political clearance; at times, they have been apologetic about this too… Having said this, the negotiations have been very constructive; we were within striking distance of an agreement. But diplomatic and non-trade issues have cropped up,” said another source without elaborating on the specifics of the trade negotiations.
What has kept New Delhi guessing is why Trump is ratcheting up the pressure given the pivot India-US relations took two decades ago and the arc of the strategic cooperation between the two countries.
“One explanation is that he is quite frustrated that India is holding up… unwilling to bend, when many other countries have,” said a top political functionary aware of the negotiations between India and the US.
One of the two sources quoted above said there could be another reason why Trump is irritated. “The US President has repeatedly said he helped bring peace between India and Pakistan – that he stopped the war. We never acknowledged it, because it is absolutely not true. In fact, the government has denied it,” the source said.
From New Delhi’s perspective, countries negotiating with Trump fall under two categories. First, countries like Bangladesh and Pakistan which couldn’t really put up stiff resistance, and did not stand up to his pressure tactics; they are learnt to have given huge concessions, including possibly political conditions. Then, there are countries like China and Canada; they speak up, openly challenge and even retaliate.
“India has found its own way – the middle way to resist. We do not criticise in public, but we stand up and do not buckle under pressure, all of this without making much noise,” the sources said, describing it as “quiet non-submission.”
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High tariffs by the US will hurt exports, but taking the economy in a very static sense, imports are seen to be far more critical than exports today. “Exports can, should and will power the economy in the coming years. We will wind our way through this carefully…,” one of the sources said.
P. Vaidyanathan Iyer is The Indian Express’s Managing Editor, and leads the newspaper’s reporting across the country. He writes on India’s political economy, and works closely with reporters exploring investigation in subjects where business and politics intersect.
He was earlier the Resident Editor in Mumbai driving Maharashtra’s political and government coverage. He joined the newspaper in April 2008 as its National Business Editor in Delhi, reporting and leading the economy and policy coverage.
He has won several accolades including the Ramnath Goenka Excellence in Journalism Award twice, the KC Kulish Award of Merit, and the Prem Bhatia Award for Political Reporting and Analysis. A member of the Pulitzer-winning International Consortium of Investigative Journalists (ICIJ), Vaidyanathan worked on several projects investigating offshore tax havens.
He co-authored Panama Papers: The Untold India Story of the Trailblazing Offshore Investigation, published by Penguin.
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