'Kissing Ass' or Kicking Back: Trump Is the New East India Company. Can India Tackle Him?

 US President Donald Trump is aiming for a trade agreement which can safely be called extortionary. It resembles the East India Company’s success in turning India into a permanent colony for more than 200 years. Whether India will acquiesce – like Canada, which removed its 3% digital services tax on major tech firms on June 30 to restart trade talks with Washington – remains to be seen.

Though the US Code refers to “trade agreement” 341 times, trade executive agreements or mini trade rent-seeking deals under American trade law jurisprudence require a prior authorisation or approval from Congress through the trade promotion authority (TPA). Regardless of the form of agreement, Congress must authorise the conclusion of a binding agreement so to enable requisite changes requisite legal changes.

Of course, the Indian Vishwaguru went ahead into talks with the Trump administration after prime minister Narendra Modi held discussions with Trump on February 13. The Indian government even boasted of signing a $ 500-billion agreement with little or no preparation.

Later, India's much-hyped “big, good, beautiful” trade agreement with the United States seemingly made halting progress when it now appears to be teetering following a sudden realisation in New Delhi about the potentially damaging implications of Washington’s regulatory and market access demands. Chief among them – allowing unfettered entry of American genetically modified (GM) agricultural products into the Indian market and removal all regulatory barriers,

India, with a population of 1.4 billion and over 700 million smallholding farmers (with farms less than three hectares), is understandably sensitive to these pressures. Yet, this "wake-up call" comes despite longstanding knowledge that the US would push aggressively to pry open India’s markets – especially for its heavily subsidised, GM-laden agricultural exports, which have already been rebuffed by nations like Australia, the European Union, and China.

Worryingly, institutions like NITI Aayog and some of its key agricultural advisors appear to be endorsing the American GMO agenda. This, despite clear evidence that such products, through cross-pollination and cultivation, could irreversibly damage India’s diverse agricultural sector. Mexico, one of America's largest trading partners, has persistently cautioned against the use and import of GMO crops, emphasising the long-term risks.

The current finance minister, Nirmala Sitharaman, who as commerce minister in 2015 did not defend India’s demand for a permanent solution to public stockholding at the WTO’s 10th Ministerial Conference in Nairobi now seems to recognise that trade negotiations cannot be initiated on the back of non-tariff issues. Yet, the damage may already be underway. Successive commerce ministers in the BJP-led government have struggled to secure substantial gains in trade negotiations and have often appeared to concede ground under pressure.

India is already facing a slew of US tariffs: a universal 10% basic tariff, 25% tariffs on steel, aluminium, automobiles, and auto-components, and an upcoming tariff on pharmaceutical exports which is particularly damaging, given India’s strength as a global supplier of generics. If India fails to comply with US demands by the July 9 deadline, it may face an additional 26% reciprocal tariff. Trump has stated that countries failing to finalise trade deals will receive formal letters outlining tariff penalties.

Some of the tariffs already put in place by the Trump administration could rob off export revenue worth tens of billions of dollars, even though India’s overall trade surplus is just about $ 44 billion. The only figment of hope is that the US will turn India into a major supplier of several items while breaking the Chinese domination of supply chains.

NTBs a monster

American commerce secretary Howard Lutnick has repeatedly labeled India’s non-tariff barriers a “monster,” insisting that high tariffs are just one part of India’s complex regulatory web. As the pressure mounts, India is realising that contemporary trade negotiations are being broadened to include sustainability clauses, carbon taxes, government procurement rules, gender and labour standards – areas traditionally excluded from trade pacts.

“We just can’t walk into it,” a senior Indian official commented. “India is an emerging economy with specific domestic needs.”

We had repeatedly raised these alarm bells. Today, it seems the chickens are indeed coming home to roost.

A group of former senior commerce ministry officials recently issued a memorandum cautioning that if the US demands excessive concessions on India’s core interests, “India should take equally hard positions and resist – even at the cost of not securing a deal.” The memorandum, signed by former cabinet secretary K.M. Chandrasekhar, ex-commerce secretary Gopal Pillai and Ujal Singh Bhatia, who is the former WTO appellate body chair, among others, argued that the short-term costs of navigating a high-tariff US market may be less damaging than the long-term fallout of an unequal agreement.

The statement emphasised that these negotiations are occurring in the shadow of an aggressive and unpredictable US trade policy. Trump’s second term has been marked by indiscriminate use of tariffs and a deliberate redrawing of the global trade architecture. In recent bilateral discussions held in New Delhi, negotiators claimed progress on market access for industrial goods and some agricultural products, according to a June 10 Reuters report. But reports soon emerged suggesting talks were faltering, owing to several red lines from both sides.

Complicating matters are Trump’s seemingly dubious geopolitical claims – such as linking an India-Pakistan ceasefire to trade negotiations – statements that were denied by Indian officials but never directly countered by Modi or his cabinet.

India has yet to publicly disclose the full extent of US demands, raising fears of quiet concessions under diplomatic or corporate pressure, including rumoured influence from large business conglomerates.

Learning from China

India could have taken a cue from China’s tough approach. When Trump announced reciprocal tariffs in April 2018, Beijing responded measure-for-measure, refusing to be bullied. This strategy eventually led the US to seek a tariff truce. Admittedly, China has economic leverage – particularly in critical raw materials – that India currently lacks. However, India still had the option to adopt a firm, no-nonsense posture instead of rushing to accommodate US demands.

Even a beleaguered nation like Iran has demonstrated its ability to stand its ground against dominant nuclear powers, maintaining control over more than 400kg of enriched uranium at 60% despite intense pressure.

Today, India finds itself cornered. If it exits talks, it risks punitive tariffs like those faced by Canada and the EU. But capitulating could mean signing away sovereign policy space and inviting irreversible damage to its economy and agriculture – echoing the colonial entrapment of the East India Company era.

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