From army helicopters to trade deal — Donald Trump's holding out carrots for India

Feb 28, 2020, 13:48 IST

In his opening speech during the two-day visit to India, US President Donald Trump said that he is looking forward to further strengthening ties between the two nations. But he was quick to add that Modi is a 'very tough negotiator’.

In spite of the camaraderie that Trump and Modi exhibited at the Howdy Modi event in Houston last year, and the mutual appreciation fest in Ahmedabad today (Feb 24), there are many areas where the two administrations disagree with each other. Trump’s generous praise for Modi at the Motera stadium in Ahmedabad may be the carrots he held out, before the sticks come out in the negotiations that will follow.

Trump wants India to buy a lot of arms and ammunition and reduce tariffs on American imports, and make Iran and China’s Huawei a common enemy. In return, Indian companies could get access to the coveted American market

“America is the biggest export market for Indian companies,” Trump reminded during his speech while asking for lesser barriers for bilateral trade and investment. But he did not mention the H-1B visa, which India wants to be easier and cheaper to get. According to industry body NASSCOM, the Indian IT firms contribute $58 billion to the US GDP which is more than what six of its states do.

The enemy of an enemy can be a friend

The India-US bilateral trade ties stand at $160 billion annually, with defence being a significant part of it. Trump said that it will supply its finest, most feared military equipment to India — including air defence systems, armed and unarmed aerial vehicles. “I am pleased to announce that our representatives will sign deals to sell over $3 billion in the absolute finest, state-of-the-art helicopters to the Indian armed forces. I believe the United States should be India's premier defence partner. Together, we will defend our sovereignty, security, and protect a free and open Indo-Pacific region for our children and many, many generations to come,” Trump said.

Not only did Trump celebrate the recent progress in the strategic defence ties between the two countries, he also invoked India’s role in the ‘quad’.

The quad is a geopolitical grouping being pushed for by the US to counter China’s influence in the region. “This has also given more profile and substance to the concept of the Indo-Pacific. In fact, the quadrilateral grouping – that is, the U.S., Japan, India and Australia – has met at the foreign ministers’ level. That’s seriously raising the profile,” said Ambassador Neelam Deo, director and co-founder of Gateway House, a think tank.

An “incredible” trade deals in the works may be tough to crack

Modi and Trump will also discuss a trade deal, which will not be signed during the current visit and has postponed it to a later date. The issue of bilateral trade has far too many knots to open.

While Trump called India a ‘tariff king’ for slapping duties on Harley Davidson, India was thrown out of the Generalised System of Preferences (GSP) of the US, which makes it easy for Indian firms to export more to the world’s largest economy.

While mentioning the trade deal Trump seemed to suggest that the ball is in Modi’s court. “I am optimistic that, working together, the Prime Minister and I can reach a fantastic deal that is good, and even great for both of our countries. Except that he is a very tough negotiator,” said Trump.

The way trade has been discussed between the two countries has been acrimonious, Deo had recently described, and, if Trump’s initial signs are anything to go by, that is unlikely to change in a hurry.

Differences as wide as continent ⁠— from Iran to China

Many incidents including India’s reluctance to stop buying oil from Iran or to bar Huawei from 5G trials, India has made it clear that it is no pushover. Added to that, Trump’s offer to mediate between India and Pakistan was also met with a firm but strong refusal.

The trade relations between the countries also got strained by additional import tariffs. While it is not as deep as the US-China trade war, the tension is still palpable. The American President called Modi a ‘tough negotiator’ at least twice in his inaugural speech during his first official India visit.

However, many political experts believe that the trade war might be exaggerated due to Trump’s nature of ‘Hard Talk’. But both countries need each other more than they would like to admit.

The common fight against terror

The one thing both Modi and Trump like singling out is ‘radical Islamic terror’. “Today, the ISIS territorial caliphate has been 100% destroyed, and the monster known as Al Baghdadi, the founder and leader of ISIS is dead. Every nation has the right to secure and control borders. The United States and India are committed to working together to stop terrorists, and to fight their ideology,” he reiterated.

India needs the US’ support in keeping Pakistan undercheck. Trump reassured India that the US government is pushing Islamabad to crack down on the terrorist organisations and militants that operate across the border.

“India is vulnerable to disruption by ISIS, Al-Qaeda, and other terrorist organisations such as Lashkar-e-Taiba and Jaish-e-Mohammad. While India’s Muslims are principally secular, it is well known that flashpoints arise that cause communal strife and affect national security. The agenda may include the sharing of intelligence, particularly in view of India’s depth of friendship and reconstruction effort in Afghanistan,” Schell said.

However, that is just one uniting factor. As Frank Schell, a business consultant on Gateway House, explained, “What the US needs from India is easier to identify than what India needs from the US.”

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