So, the much-vaunted India-US ties has cratered, at least for now. As Hindi speakers might be wont to say: nazar lag gaya! But longtime observers will hasten to point out that the relationship has weathered worse storms before and there is no reason to believe that eventually this too shall pass. The question is how long it will take to recover and what residual trust will then govern the relationship when that occurs. US Treasury Secretary Scott Bessent stated somewhat helpfully that: we will come together at the end of the day. This reminds me of a story. I remember hosting an investors meet as India’s Ambassador in Paris when a lot of people present underlined the difficulty of doing business with India. An American investor piped up and said he had no problem doing business with India. I asked him the secret and he had a humorous response. He said to me: In the end, it always works out with India. If you find something is not working, then it probably is not the end, so keep at it! This may be good advice for both countries at this crisis point in their relationship.
It is no secret that India was one of the first countries to engage with the Trump administration for a trade deal. So, the question naturally arises: what happened? Three plausible reasons suggest themselves. One, President Trump is piqued with India. Two, the case of India buying Russian oil. And three, the redlines outlined by India in the trade talks with the US. Of the three, the personal pique of President Trump may have anything to do from his claimed mediation in the Indo-Pak conflict, attempts to secure a Nobel Prize or indeed to perceived slight over something else that India said or did. It is meaningless to speculate on this without full knowledge of facts but at some point Indian policymakers will have to deal with it one way or another. With President Trump there is only a thin line between what is personal and what is official.
Of the other two reasons, some wiggle room is possible and India should “keep at it” as the American advised above. It is comforting to know that the two countries continue to talk in the various sectoral dialogues meant for the prupose. So, the two plus two dialogue held recently at the level of the Additional Secretary (Americas) in the MEA, Amb Nagraj Naidu, and the Senior official at the State Department Bureau of South and Central Asian Affairs, Ms Bettany P. Morrison, is very welcome. It is an open secret that Ms Bettany P.Morrison is powerful beyond her pay grade and has worked with Secretary Marco Rubio for a long time. Talks appear to have continued in other areas including on nuclear cooperation and intelligence matters, so that is a good thing too.
On India buying Russian oil, the price differential between Russian crude and Brent crude is diminishing gradually. Our position has been that we will buy crude from wherever it is cheap, given the overriding objective of assuring energy security for millions of Indians. If this understanding is correct, other options may be explored, at least in the medium term. The gross advantage of buying Russian crude for India works out to something like 5 Billion USD per year. The loss of the American export market as a result of punitive tariffs would be eight times that i.e. 40 Billion USD. Some might argue that there is no price worth paying for strategic autonomy, but welcome to realpolitik dilemmas relating to national interest.
On the redlines in trade talks, PM has been very clear that he will never sacrifice the interests of farmers, dairy producers and small entrepreneurs. The Americans probably know this well, but this needs reiteration. It may come as news to some that if you take global trade as a whole, only 10 per cent of it is really in agriculture products. Can we therefore tweak some of our offers made to the US in industrial products? Renowned Indian trade policy experts have suggested this and it is worth exploring from our persepctive. Equally, if we can insist on favourable terms for our industrial exports to the American market that would be great. Again, we need to keep the conversation going, though the postponement of the American trade delegation to India is a regrettable setback.
The effect of the 50 per cent punitive tariffs on GDP and even export revenue is manageable, even if it hurts in the short term. The real worry is loss of employment and possible devastation of livelihoods. Areas like Tiruppur, Surat, Noida and places in AP, Kerala, TN and Gujarat (from where Shrimps are exported to the US) need fiscal support by the Central Government. It is not clear the US policymakers know the extent of this damage, so they need to be sensitised on this as well. The Government must also be commended for exploring 40 other markets for diversifying Indian exports; this has not come a moment too soon.
The next few weeks and months are crucial for India-US ties. Painstaking backchannel talks may already be happening, but if they are not, they should. That alone will prepare the ground for a summit-level meeting between the two leaders at some point. Not so long ago, both countries described India-US ties as the most “consequential”or the most “defining” relationship of the twenty-first century. Geopolitics may have changed some things, but the fundamental logic of that statement remains valid. The challenge is to try and see how the troubled relationship can be salvaged at the earliest. Meanwhile, India should obviously play all sides, play all its cards and play the long game.
Dr Mohan Kumar is Director General of the Jadeja Motwani Institute for American Studies at the OP Jindal Global University and a former Indian Ambassador to France. Views are personal.
Diplomacy and Geopolitics 