With the headlines like these, it hasn’t taken long for the usual suspects to portray the Indo-US trade deal deferment as a setback for India and a defeat of PM Modi’s foreign policy. Even as the left propagandist masquerading as neutral commentators have found a way to connect everything from Gujarat’s economics, smart city projects and the Olympics to a wall being erected (purportedly to hide a slum from Trump’s cavalcade) in Ahmedabad, it would be imperative to nip any such mischief regarding the trade deal in the bud.
Does India really want a trade deal more urgently than the US?
No. Donald Trump has fashioned himself as a successful billionaire and a champion negotiator in the eyes of his electorate. He is supposed to be adept at cutting favourable deals with trading partners across the globe which hitherto had been adversarial to the US interests. Having already labelled India “Tariff King” and brought up the Harley Davidson tariff issue multiple times, a trade deal with India would come as a shot in the arm for his campaign when he comes up for reelection in November later in the year.
Further, Trump himself has mentioned that the deal is only postponed and he has something bigger in store for after the elections, and it should be anybody’s guess — that the US President would be in a better position to yield to Indian demands after the elections than he currently is in the run-up to it. This should explain the dilly-dallying by the Indian negotiators, to the dismay of Trump, who would have wanted to brandish the deal as an achievement to the audience back home, esp. in the Swing States.
The Swing States arithmetic
One look at the issues of contention in the negotiation should make it amply clear that through dairy and automobile exemptions President Trump is targeting the farming and manufacturing jobs in the Swing States. Trade representatives from the Swing State of Georgia have, in fact, pressed for tariff reliefs for their produce, highlighting the importance of the deal in the US elections.
India’s moral and cultural objection
India is more than willing to increase Oil&Gas related imports from the US for its energy requirements as it will be mutually beneficial as shale production is US gets increasingly price efficient, but it has stood its ground on Dairy imports. The principled stand against importing dairy where the cattle has been fed animal and blood extracts is not only morally revolting but also violates our religious and cultural beliefs. The European Union ban on such dairy imports from the US also lends credibility to Indian opposition and is sure to find support among the Indian populace.
Through this deferment India has demonstrated a willingness to slug it out with the US which has unilaterally been chipping away at India’s trade benefits culminating in the recent classification as a developed nation and removal of India from the Generalized System of Preferences (GSP) regime. Simultaneously, the very warm welcome being accorded to President Trump signals that the two largest democracies continue to be important strategic partners to each other. The deal deferment has demonstrated PM Modi to be more than willing to walk hand in hand with President Trump at “Howdy Modi” if it endears the Indian diaspora to him, but at the same time can’t compromise with India’s own interests to hand him a trade deal victory just to wrest away the fence-sitters from the Democrats.