From edging closer to signing a trade deal in early July, to the imposition of a 25 per cent penalty on August 6, on top of a 25 per cent tariff levied just a few days earlier, India-US trade relations have now moved into uncharted territory. While the additional tariffs will come into play in 21 days, opening up a possible window for negotiations — US trade negotiators are slated to arrive in Delhi on August 25 — the weaponisation of tariffs by US President Donald Trump to achieve what seem to be both trade and non-trade objectives, has placed India at a considerable disadvantage when compared to competitors such as Vietnam and Indonesia. In the face of this mounting pressure, India must stand firm, put its national interest first.
Not surprisingly, Trump’s action has evoked a strong response. Calling it “unfair, unjustified and unreasonable”, the Narendra Modi government has said it will take “all actions necessary to protect its national interests”. As it continues the trade talks with the Trump administration, it may be possible to offer more concessions in certain segments, there may be room for greater give and take. But, at the same time, Delhi should stay with its red lines in the face of mounting pressure in sectors such as agriculture and dairy — politically contentious areas, which are critical to the livelihoods of large sections of the Indian labour force. On Thursday, speaking at the M S Swaminathan Centenary International Conference in Delhi, Prime Minister Narendra Modi emphatically stated the government’s position: “India will never compromise on the interests of its farmers, livestock rearers and fisherfolk”.
India’s purchase of discounted Russian oil, which has ensured price stability in the global oil market, was a pragmatic move to secure its energy supplies. But with Trump raising the costs of continuing with this trade — as he attempts to curb the flow of money to Russian President Vladimir Putin, ostensibly to end the conflict in Ukraine — the same hard-headed realism must guide Delhi’s approach now. Imports of Russian oil were at 1.6 million barrels per day in July, down 24 per cent from the month before, as per a report in this paper. The cost-benefit analysis of relying on one source of supply to such a large extent, however, must be seen only through the prism of India’s interests — not dictated by Trump. Goldman Sachs, an investment firm, has estimated that the steep tariff on India could bring down economic growth by around 0.6 percentage points. But who India should trade with, or for that matter, which grouping it should be part of — Trump has in the past also taken umbrage at BRICS — should be guided by India’s interests alone. Such issues should, in any case, not be part of trade talks between the two countries.
