Prime Minister Narendra Modi’s two-day visit to Washington last week has been hailed by many domestic foreign policy experts as a resounding success. “Defying traditional skepticism and recent anxieties about India-US relations, Prime Minister Modi and US President Donald Trump laid out an ambitious roadmap to deepen bilateral ties,” remarked a respected foreign policy analyst. Another commentator echoed this sentiment, stating, “Modi’s visit was both symbolically significant and substantively fruitful.”
However, several international media outlets have been sharply critical of India’s handling of the visit, particularly its response to President Trump’s disparaging remarks, some of which were made in Modi’s presence. Ahead of the visit, a prominent British publication argued that America’s assertive nationalism could effectively reduce India to a “partially subordinate ally,” a stark contrast to India’s long-standing self-perception as a “wholly independent actor.”
Over the past decade, and especially in recent years, India has positioned itself as a leader of the Global South. Yet, as China expands its influence across Asia, Africa, and South America, championing multilateralism, India’s growing reliance on the US risks undermining its credibility among developing nations. This is particularly concerning as India aims to double bilateral trade with the US to $500 billion within five years through a proposed trade agreement. Critics question whether India can simultaneously advocate for the interests of the Global South while deepening ties with a global superpower. It would be tantamount to running with hares and hunting with hounds.
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A bilateral free trade agreement with the US raises further questions, given the stark structural disparities between the two nations. For instance:
- Population: India’s 1.4 billion people far exceed the US population of 347 million.
- Income Levels: The US per capita income of $37,683 is 16 times higher than India’s $2,343.
- Agriculture: Nearly 800 million Indians depend on agriculture, compared to just 25,000 heavily subsidised US farmers. The Indian peasants are small with meagre landholdings.
- Workforce: India’s workforce, including both organised and unorganised sectors, stands at approximately 565 million, dwarfing the US workforce of 168 million.
- Industrial structure: India’s economy relies heavily on fragmented small and medium enterprises, unlike the US’s more consolidated industrial base.
While India enjoyed a $38billion trade surplus in 2022, with bilateral trade totaling $157 billion, President Trump has made it clear that a free trade agreement would aim to reverse this imbalance. Such a deal could severely impact India’s agriculture and pharmaceutical sectors, which are vital to providing affordable medicines and sustaining livelihoods. India’s robust pharmaceutical industry, a legacy of reforms initiated by Indira Gandhi in the 1970s, has been a lifeline for affordable healthcare globally. A trade deal that undermines this sector could have far-reaching consequences.
An unequal partnership?
The joint statement issued by Trump and Modi, particularly on trade, appears heavily skewed in favor of the US. During a press conference on February 13, Trump launched a scathing critique of India’s trade policies, accusing the country of imposing “very, very high tariffs” and creating an uneven playing field. “India’s tariffs are 30, 40, 60, even 70% on many goods,” he said, adding, “We want a level playing field, which we think we’re entitled to.”
Trump also emphasised the US’s intention to sell more oil, gas and liquefied natural gas (LNG) to India, framing it as a solution to the trade deficit. “We can make up the difference easily with the sale of oil and gas,” he stated. While the two leaders announced a new energy agreement to boost US exports, critics argue that this focus on fossil fuels contradicts global efforts to combat climate change, especially after the US withdrew from the Paris Agreement in 2016.
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The 33-paragraph joint statement highlighted a bold new goal – dubbed “Mission 500” – to double bilateral trade to $500 billion by 2030. However, the rhetoric surrounding the negotiations suggests an unequal footing. Trump’s aggressive tone and Modi’s apparent acquiescence have raised concerns about India’s ability to safeguard its interests.
A threat to multilateralism?
Trump’s unilateral trade policies, including tariffs on Canadian, Mexican and Chinese goods, as well as steel and aluminum imports, have already undermined the World Trade Organisation’s (WTO) rules-based system. His administration’s disregard for multilateral trade norms signals a troubling shift toward protectionism. For India, this poses a significant challenge, especially as Trump prepares to unveil reciprocal tariffs on April 2, which could further strain bilateral relations.
Historically, trade negotiations under the General Agreement on Tariffs and Trade (GATT) and its successor, the WTO, have allowed developing countries like India to maintain higher tariffs to protect their economies. However, Trump’s accusations against India and other developing nations for building trade surpluses ignore this context. His approach risks dismantling the global trading system that has, until now, provided a framework for fairer negotiations.
A risky gamble?
India’s efforts to strengthen ties with the US under the current administration may come at a high cost. By aligning itself too closely with a protectionist and unilateralist US government, India risks not only its economic interests but also its standing as a leader of the Global South. As negotiations for a bilateral trade agreement begin, India must tread carefully to ensure that its aspirations for growth and self-reliance are not compromised in the pursuit of a lopsided partnership.
The road ahead is fraught with challenges. India’s ability to navigate this complex relationship while maintaining its strategic autonomy will determine whether it emerges as a true global leader or becomes increasingly subordinate to US interests while mortgaging India.
Ravi Kanth Devarakonda is a financial journalist based in Switzerland.
