With immigration, tariffs at forefront, why PM Modi’s US visit matters to New Delhi

Modi and Trump enjoy certain personal rapport. From New Delhi’s perspective, a face-to-face meeting between the two leaders is important.

This rapport was built over back-to-back visits by Modi and Trump to each other’s countries — at the September 2019 Howdy Modi event in Houston, the Prime Minister famously declared, “Abki Baar, Trump Sarkar”; in February 2020, Trump loved the reception he received from Indians in Ahmedabad.

But the agenda of Trump 2.0 is much more aggressive.

Immigration, deportation

The US has sent back a first batch of 104 Indian illegal immigrants, in shackles, on a military aircraft. It was bad optics, and the political opposition took the government to task for the alleged mistreatment.

Another around 800 individuals — 487 presumed Indian citizens and 298 others in the final stages of verification — will be deported soon. New Delhi has said it is ready to take back its citizens, even though it has “registered concerns” on their mistreatment by the Americans.

There are about 7.25 lakh illegal Indian immigrants in the US, of which 20,000 have been identified for deportation. Some 15,500 Indians have been deported since 2009 — of which 6,135 were sent back during the four years of the first Trump presidency.

For India, receiving illegal immigrants is part of complying with international law, but the handcuffs and shackles — part of US SOP — carry the politically damaging perception of “weakness” vis-à-vis another country.

As such, the humane treatment of Indian deportees will likely come up during Modi’s meeting with Trump. From India’s perspective, this is not an unreasonable ask of a close Strategic Partner. More importantly, India would like to ensure that the movement of Indians to the US through legal channels — for study, work, or tourism — is not affected.

Trade and tariffs

Tariffs, the “most beautiful word in the dictionary” for Trump, are a major irritant in the relationship. Trump, who has imposed tariffs on Canada, Mexico, and China, has described India as a “tariff king” and “abuser” of tariffs in the past.

On Monday, Trump announced a 25% tariff on aluminium and steel imports with “no exemptions, no exceptions” for any country. Indian companies fear downward pressure on domestic steel prices due to the risk of losing out in the US steel market, the largest in the world. There are also concerns over dumping of steel in India — imports are already on the rise due to trade diversion that began after Trump imposed a higher import duty on steel products and certain aluminium products in his first term.

With the almost $200 billion bilateral trade, what irks Trump is the $40-50 billion surplus that is in India’s favour. Lt Gen (retd). H R McMaster, who was the United States National Security Advisor (NSA) from 2017 to 2018, has written in his book At War with Ourselves: My Tour of Duty in the Trump White House, “India’s lack of reciprocity in market access incensed Trump.”

The US President has typically used threats of tariffs to negotiate better deals, and India has already slashed tariffs on high-end motorcycles and electric batteries ahead of Modi’s visit to smoothen the conversation.

McMaster recalled, “On India, it was tariffs on motorcycle components that disadvantaged the iconic American company Harley-Davidson. Although the president often exaggerated the numbers — India’s 39 percent tariffs became 200 percent tariffs — it was a good example of India’s self-defeating protectionist policies. Three years later, Harley-Davidson would stop manufacturing in India, at a time when Modi was hoping to lure more foreign manufacturers to the country.”

So, a more pragmatic approach from Delhi would be to negotiate a trade deal where both sides benefit from lowering tariffs and market access. There is a growing realisation that the world’s soon-to-be third largest economy cannot have high walls of protectionism. A trade deal was being negotiated in the first term of the Trump administration, but couldn’t come to fruition.

Strategic alignment on China

Trump became the first US President to name China as a strategic threat and rival for the US. This was spelt out in the National Security Strategy in 2017.

McMaster wrote, “Japanese national security advisor Yachi Shotaro and Indian foreign secretary Subrahmanyam Jaishankar both shared their grave concerns over China’s increasingly aggressive behaviour.”

Later, he met NSA Ajit Doval and Jaishankar, where McMaster spoke about the war in Afghanistan and the threat to India from nuclear-armed Pakistan, but Jaishankar and Doval “spoke mainly about an increasingly aggressive China. The two men were open to unprecedented cooperation thanks to Xi Jinping’s aggression.”

In a meeting with PM Modi at the Prime Minister’s official residence, he recalled, “Modi gave us a warm welcome. It was clear that deepening and expanding our relationship was a top priority for him. He expressed concern over China’s increasingly aggressive efforts to extend its influence at India’s expense and over its growing military presence in the region.”

Quad (grouping of India, US, Australia and Japan) was revived in November 2017. Eight years later, US Secretary of State Marco Rubio’s first plurilateral meeting was that of Quad Foreign ministers, where Jaishankar was present, testifying to the continuing alignment.

Although Trump has lowered the decibel against China in public rhetoric, New Delhi expects continuity in the substantive policy.

And that frames the continuity in the tech cooperation — the initiative on critical and emerging technologies that focuses on everything from AI to space to quantum computing. This is crucial since Beijing is in a tight competition with the US in the AI race.

China is also likely to impact India-US defence cooperation. As Trump wants India to buy more American equipment, such as drones, the China challenge will be an important glue that Modi and Trump discuss.