Trump in India: Inside Story on What’s ‘Cooking’ on Both Sides

‘Chinese’ on everyone’s mind? The US and India both need each other to counterweight China.

File photo of PM Modi and US President Donald Trump.

(Photo: Altered by The Quint)

Donald Trump is visiting India on February 24-25, just after the efforts to impeach him were rejected in the US Senate. The President comes in an election year, but since he is not likely to face any challenge from his own party that is not a problem. Neither, at present, does it appear that the Democratic challenge look significant.

Trump sees the visit as a return favour for his “friend” Modi.

The  ‘Howdy Modi’ event in Houston that drew 50,000 Indian Americans may have been aimed at the electorate back home, but it also provided the US President with not just applause, but some political dividends in terms of votes and campaign contributions from the Indian American community. New Delhi was keen to invite Trump as the Chief Guest at the Republic Day parade in January, but the President declined because of what the White House said were “scheduling constraints.”

Trump’s over-the-top taste for tamasha fits well with that of his host Narendra Modi who is readying a mega show called ‘Kem Chho Trump’ in Ahmedabad, a glitzier and bigger version of the ‘Howdy Modi’ event in which Trump participated.

After a period in 2017- 2018 when the two did not meet because personal ties between Modi and Trump cooled, they have stepped up their engagement, meeting 4 times in 2019, including in the ‘Howdy Modi’ meet.

• Trump sees the visit as a return favour for his “friend” Modi after Houston’s ‘Howdy Modi’ event.
  
• US and India seek to straighten and strengthen their trade relations through this visit.
  
• India is seeking a reinstatement of the benefits under the GSP scheme which have been recently withdrawn by the US.
  
• The one area through which New Delhi hopes to win over Trump is defence purchases from the US.
  
• Both India and the US need each other to counterweight China.
  

Deepening of India-US Ties

In the last four years, the relations between the two countries, especially in the area of defence has taken many leaps. In 2016, India finally signed Logistics Exchange agreement (LEMOA), that committed the two sides to support each other’s naval vessels and personnel with logistics, spares and fuel.

Two years later, they signed the Communications  security agreement (COMCASA). In  turn, the US designated India as a Major Defence Partner in 2016 and conferred the Strategic Trade Authorisation-1 (STA-1) status on India to streamlines exports of sensitive goods from the US in 2018.

In December 2019, the two sides signed an Industrial Security Annex to deepen industry collaboration between the two sides and enable greater sharing of advanced technology.

This was, in short, to facilitate India becoming a significant part of the US-led supply chain in the defence sector.

Institutional ties have also grown with frequent high-level visits including the annual “2+2” dialogue of the two countries’ defence and foreign ministers.

However, Not All is Hunky Dory Between Trump and India

But this past has not been glitch free. We had the US coercing India to give up oil purchases from Iran, and threatening to impose sanctions under their CAATSA legislation to block India’s defence acquisitions from Russia. Trump’s repeated offers to mediate in Kashmir have been unsettling for New Delhi, especially when the US Congress is paying an uncomfortable amount of attention to the lockdown of the state and the imprisonment of its mainstream political leaders.

On 12 February, a bipartisan group of US Senators—including Trump confidante Lindsey Graham—wrote to US Secretary of State Mike Pompeo expressing concern over the continuing internet curbs in Kashmir—the longest shutdown by a democracy—disrupting access to medical care, business and education for 7 million Kashmiri people. The letter also refers to the Citizenship Amendment Act and the National Register of Citizens and says that Modi’s policies “threaten the rights of certain religious minorities and the secular character of the state.”

Tricky Trade Deal: Will It Happen?

Actually, the bottom line is that when Trump talks and thinks of India, his most common refrain is trade. Not surprisingly, from the American point of view, the greatest amount of effort in preparation of his visit has been expended on a trade agreement. Multiple rounds of talks had taken place in recent weeks between the Commerce Minister Piyush Goyal and the US Trade Representative Robert Lighthizer over the telephone.

FIle image of Union Minister Piyush Goyal. (Photo Courtesy: @PiyushGoyal)

Given the wide gulf in the positions of the two sides, most observers were expecting a limited trade deal during the visit, but the report that the US Trade Representative Robert Lighthizer was cancelling his visit to India has led to consternation in New Delhi.

As a result, the government has hurriedly let it be known that India is offering to partially open up its poultry and dairy market to sweeten the deal.

President Trump himself is playing it cool as saying “if we can make the right deal, we’ll do it.”

In 2017, India’s trade surplus with the US stood at $30 billion. This has now gone down to $ 16 billion. Bilateral trade has now exceeded $140 billion. All such surpluses are a red rag for Trump who has variously blasted India as a “Tariff king” and  cancelled India’s General Scheme of Preferences (GSP) privileges.

What India Wants from President Trump

Recently the USTR office classified India as a developed country ineligible for the GSP. So, India is making a special effort to soothe the US. But many problem areas remain such as the recent Indian cess on medical devices, or data localization rules.

India is seeking a reinstatement of the benefits under the GSP scheme, as well as exemption from the high duties the US imposed on certain steel and aluminum products, greater market access for its agriculture and manufacturing sector, including autos and auto components.

The one area through which New Delhi hopes to win over Trump is defence purchases from the US. Here, they kill three birds with one stone. On one hand, India will make urgent acquisitions needed for its defence modernization, and on the other, they can tote  up the trade as part of the effort to reduce the trade deficit as well as show their strategic proximity to the US.

Defence and Strategic Deals to Bring India and US Closer

India has sealed two mega deals with the US together worth $ 3.5 billion (Rs 25 crore) These include 6 Apache attack helicopters for the Army ($930 million) and the $ 2.6 billion deal for the 24 MH-60R multi mission helicopters for the Navy.  The total Indian deals with the US since 2007 will now reach over $ 20 billion. The IAF had earlier acquired 22 Apache helicopters as well.

India is also looking at more deals—for six more P-8I long range maritime patrol aircraft ($ 1.8 billion), the Integrated Air Defence Weapons System for to shield Delhi against short-range missiles ($1.86 billion), 30 Sea Guardian armed drones ($2.5 billion plus) and 13 MK-45 naval gun systems ($1.02 billion) but it currently lacks the capacity to fund them.

The US is also pushing India to buy US fighters for its huge 114- aircraft deal for fighters. It is offering the upgraded FA-18, F-15s  and  F-16s for the Air Force.

India’s defence budget stands at $47.34 billion (minus defence pensions) and of this some $16.2 billion is the capital outlay to buy costly new weapons systems and equipment. However, 90 per cent of this is already committed to paying off past purchases.

Beyond the trade tensions and ‘Kem Chho’ extravaganza, there is a strategic context to the visit. The US views India as the only viable counterweight to China in terms of its size, economy and location. This is despite New Delhi’s reluctance to get into a situation where it has to directly confront China.

For its part, as it falls further behind China economically and militarily, India needs the US to balance Chinese power. The US is not unaware of this, but they have few choices and are happy even if the relationship grows at a slower pace than what they desire.

(The writer is a Distinguished Fellow, Observer Research Foundation, New Delhi. This is an opinion piece, and the views expressed are the author’s own. The Quint neither endorses nor is responsible for them.)