Trump-Modi Bromance: Optics Fine, But Bleak Prospect Of Big Ticket Deals

Day one of US President Donald Trump’s visit to India was mostly about opulent visuals and soothing rhetoric. Trump showered praise and platitude on India in ample measure and made it apparent at Motera that domestic politics in the US was as much in his sight as deepening ties with India.

For someone seeking a repeat mandate amid a welter of controversies and a failed attempt at his impeachment, the images from India beaming into living rooms back home would serve well. The numerically weak but politically assertive Indian-Americans traditionally vote for the Democrats, but the Motera spectacle may persuade them to think Republican this time.

Optics has its uses in politics. It is no accident that Trump would be in the company of the greatest believer in the power of visual messaging, Prime Minister Narendra Modi, by his side while wooing his constituents in the United States. After the glittering show of bromance, what? Here we move into tricky territory.

As trade equations go, these are not the best of times for both. Trump’s eagerness to even the balance of trade situation in US’s favour and growing protectionism in India have created a massive roadblock in trade talks. With overall bilateral trade at close to $150 billion, the US is India’s largest trade partner. But things have not been hunky-dory ever since the Trump administration identified India as one of the big sources of trade deficit besides China.

In clearer terms, India exports to the US far more than it imports. In 2018, the gap stood at $21 billion, with India’s exports at $54 billion and imports at $33 billion. The US has been accusing India of imposing prohibitory tariffs on American goods, and thus blocking their access to the Indian market.

In this backdrop, it is not surprising that no big ticket trade deal could be finalised between the countries before the US President’s visit. Making matters worse is the economic slump India is in the midst at this point. With the government focussed on reviving the economy’s animal spirit, especially in the manufacturing sector with programmes like Make in India, it is not best placed to entertain the relief the US expects. Protectionist barriers are raised high on both sides and this being the election year for the latter, it would take much more than the Modi-Trump bromance to get the trade equation back to normal.

The US, meanwhile, has upgraded India’s status from developing to a developed country. It means the concessions Indian exporters enjoyed in the US for several decades will come to a halt now. They would be taxed on a par with other developed nations and be subjected to binding restrictions as the latter. This can only be bad news for India looking to increase its volume of exports to the US. It will take brilliant skills at negotiation from both sides to find a way out.

There are pressing questions of sub-continental geo-politics to be settled too. The US is in the process of ending engagement in Afghanistan. The talks with the Taliban are at an advanced stage. Withdrawal of American forces leaves India’s investment in the war-torn country, in terms of physical infrastructure and otherwise, at great risk. The Taliban is not known to be friendly to India. Its growing prominence would leave Pakistan in a position of advantage in the strategically-important country.

Besides this, the US under Trump is keen on cutting back on its involvement in the Asia-Pacific region and letting India take the lead. This threatens to damage the delicate balance between India and China and position them as countries in a conflict. India would certainly be wary of it.

The scenario beyond the optics at Motera looks bleak. It is possible both countries would agree on face-savers for now and reserve the thorny matters for a protracted deliberation.