Donald Trump’s first India visit: Here’s what India-US may settle upon even if not a big trade deal

By: and |
Published: February 21, 2020 5:20:46 PM

With US President Donald Trump set to make his maiden visit to India, all eyes are on these two democracies’ leaders for action items despite there being no expectation of a major trade deal.

As India and the US are at loggerheads on various trade issues, resolution of some of these is also expected.

With US President Donald Trump set to make his maiden visit to India, all eyes are on these two democracies’ leaders for action items despite there being no expectation of a major trade deal. While Donald Trump has already said that a big trade deal is not on the cards during his India visit, economy watchers are still betting on agreements and new commitments. “We have a reasonable chance at getting some solid deliverables. Perhaps some type of agreement to roll back trade barriers and new oil, gas, and defense commitments,” Richard M Rossow, Wadhwani Chair in US-India Policy Studies, CSIS, told Financial Express Online.

As India and the US are at loggerheads on various trade issues, resolution of some of these is also expected. And there is a good reason for India to resolve its differences with America. “Given that Indian exports are driven more by world economic growth and that USA is expected to be main driver among the advanced economies as per IMF and World Bank, a quicker resolution of these issues will be beneficial to our country,” CARE Ratings said in a report on Friday. The US is crucial to India’s exports, as about 15.9% of total exports from India in FY19 were to the United States alone. Among major items, India sends gems and jewellery, agriculture and allied products, readymade garments and electronic goods to the US.

On the other hand, India also holds great importance for the US. India is the second largest importer of US items with about 6.9% of the country’s total imports were to India. In fact, with the US focused on boosting exports and increasing inbound foreign investment, “India can potentially be a crucial partner on both fronts,” Richard M Rossow said.

However, with India shifting stance to protectionism since Prime Minister Narendra Modi took charge, it is likely that President Donald Trump will push for more market access. “India has been closing the market to imports pretty steadily since Prime Minister Modi took office. This year’s Union Budget, for instance, proposes customs duty hikes in over 60 product groups,” Richard M Rossow said. In fact, President Trump has been quite vocal about issues pertaining to India, and recently said that India does not treat the United States “very well”. However, he added that he happens to like Prime Minister Narendra Modi.

Further, President Trump could also be looking to have more Indian conglomerates set their shops in America and boost new investments.

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