Optics and personal chemistry apart, the upcoming visit of United States President Donald Trump is expected to give a push to the bilateral trade deal and address the key sticking points. There is bound to be hype and hoopla surrounding the event as Prime Minister Narendra Modi is hosting a massive ‘Kem Chho, Trump’ rally in Ahmedabad which will mirror the ‘Howdy Modi’ event in Houston last year. Trump was hugely impressed with the ‘Howdy Modi!’ show which was attended by over 50,000 Indian-Americans. Now, Modi is returning the favour with a huge reception in his home State. But, the outcome of Trump’s first trip to India would be judged by how negotiators from both the countries will handle the irritants on the trade front. Bilateral trade tensions have been escalating over the last three years with the Trump administration taking a protectionist turn and its insistence on reciprocity in tariffs and market access is hurting India. By ending the special trade status to India under the Generalised System of Preference (GSP), the US delivered a blow to bilateral trade. Abolition of sanctions waivers for oil purchases from Iran has also made India uncomfortable. With the World Trade Organisation (WTO) being increasingly sidelined, India needs to go for a bilateral trade accord with the US. There is, of course, greater convergence now as both the countries are on the same page on the issue of terrorism while defence cooperation is steadily growing. Still, the Indo-US economic relationship is fraught with several challenges. If the US wants to leverage its strategic partnership with India to serve as a counterweight to China, then it must adopt a flexible approach towards trade disputes.
While the US wants India to lift protectionist restrictions to get greater market access for its technology exports, agriculture and dairy products, New Delhi has been insisting on increased US trade and investment as well as more predictability for highly skilled immigrants. In recent times, America has pushed back against Indian policies on medical devices and proposals related to data localisation and e-commerce. Modi government’s emphasis on local sourcing norm for industries such as electronics, retail and solar continues to be an irritant for American companies. Despite these differences, the two countries need to stay focused on things that are doable with a pragmatic and accommodative approach and firm up the trade deal before the Trump-Modi meeting in Delhi later this month. It will be critical to sustain the momentum in the bilateral relationship. Under the trade deal, India is expected to clear the $2.6-billion agreement for 24 Lockheed Martin-built MH-60 Seahawk helicopters. Also on the cards is an agreement to buy a $1.867-billion integrated air defence weapons system.