Prime Minister Narendra Modi’s first meeting with US President Donald Trump in Washington DC on Monday will be an occasion to highlight ‘Make in India’ is not antithetical to ‘America First’ and that both the nations have enough in common to further ties despite differences over issues ranging from visa to climate change. The two leaders could dwell more on issues where there is greater synergy than dissimilitude, say official sources here. Defence ties would get a leg-up, so would strategic relations and counter-terrorism co-operation. More MoUs may be in the offing in these areas, they said.
Modi would also pitch for greater foreign direct investment from the US — which had jumped in 2015-16 from the year before but collapsed under Trump’s watch. The visit will also be a good occasion to point out how Indian defence contracts to American firms can be a great generator of jobs in the US, even if companies like Lockheed Martin make in India. This is because much of the parts in any case could still be made in the US and exported to India — a much better proposition for the US than stubbornly insisting on only exports and losing out contracts worth billions of dollars to competing nations.
The much-delayed operationalisation of the 2008 India-US civil nuclear deal might also be announced during Modi’s visit. A year ago, the two sides had resolved to work towards finalising the contractual agreement by June 2017 for building six reactors in Andhra Pradesh by Westinghouse and India’s NPCL. Talks likely on visa curbs, though no firm US commitment expected.
However, analysts don’t see any firm commitment coming from the US on not tightening its visa policy for foreign workers, much to the consternation of the Indian IT industry. Similarly, India won’t pledge to dilute its “fully WTO-compliant” intellectual property rights regime to accommodate American demands, sources told FE. The US may also want India to trim import tariff and both the sides would seek greater market access. The fact that it’s just a two-day visit, with no Madison-square-like gala event on the agenda, suggests both the sides choose business over bonhomie. This is Modi’s fifth visit to the US as the Prime Minister, and arguably the least grand. For the US, it’s an important occasion to soothe frayed nerves after Trump’s rants against India— especially on high tariffs, climate change and visas — that are often further from truth.
Nevertheless, as Joshua P Meltzer and Harsha Vardhana Singh of Brookings Institution point out in a report, both the leaders’ primary goals of creating massive jobs in their respective nation are not in conflict, as India is largely focused on developing manufacturing jobs in parts of the supply chain, which is different from the US focus on domestic manufacturing. Both the sides must focus on low-hanging fruits. Considering that Trump prefers bilateral to multilateral trading system, time is apt for India and the US to explore trade and investment agreements, said the analysts.
Climate change, another issue where difference persists after Trump’s pull-out from the Paris climate pact, is unlikely to be discussed. Modi has made it clear that India was committed to preserving climate irrespective of the Paris agreement.
Modi began his first day of the visit meeting with some of the titans of corporate America, including Apple’s Tim Cook, Amazon chief executive Jeff Bezos, Cisco’s John Chambers, Sunder Pichai of Google and Microsoft’s Satya Nadela. While Apple is in talks with the government on setting up a manufacturing unit, Amazon has already applied for investing in food retailing here. Indian officials believe start-ups and urban infrastructure projects like smart cities offer great opportunities to the US companies to invest.
“Their (Modi and Trump’s) discussions will provide a new direction for deeper bilateral engagement on issues of mutual interest and consolidation of multi-dimensional strategic partnership between India and the US,” said Gopal Bagley, spokesperson of the ministry of external affairs.
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Just days ahead of Modi’s visit, the US government authorised the sale of a naval variant of the Predator drones to India worth over $2 billion. Last week, Tata Advanced Systems signed an MoU with Lockheed Martin to make F-16s in India, although no time-frame is offered. With Trump’s fixation over correcting trade imbalance with countries, the US would seek greater market access — especially in agriculture — and lower tariff on its products. The bilateral trade between India and the US have grown almost six times since 2000 to around $115 billion in 2016. US’ overall trade deficit with India was around $30 billion in 2016, the ninth-highest, but only a tiny fraction of that with China.
It’s important to note that while the WTO estimate for India’s average applied most-favoured nation (MFN) tariffs is above 13%, the country’s weighted average MFN tariff is less than 4%, according to Brookings’ Singh. As such, Trump’s assertion that one country (read India) taxes Harley Davidson as much as 100% on its exports has little merit, as much of the bike maker’s supplies to India attracts just a 10% import duty.