Hold The Bubbly

 

 

CELEBRATIONS are in order for India. With purposeful stoicism, it has prompted an extraordinary turnaround in the country’s global economic engagement. The United States of America has come around, shunning its reckless bravado to finally see merit in logical shaping of economic relations with an emerging power. The Indo-US trade deal is back on the table after languishing in the mess created by US President Donald Trump’s whimsical behaviour. And this time, the finality of the deal looks imminent in the near future. Normalcy has once again taken a fresh breath in Indo-US relations. The trade deal with the United States will be a momentous occasion for both countries, especially India as it sends multiple messages to the world about its foreign and geoeconomic policies. One, browbeating cannot be a weapon for any entity or power to make India follow its diktat. Two, strategic autonomy is a non-negotiable thing for New Delhi.

 

Three, in the economic headwinds across the globe India remains the best bet for the world seeking a steady financial revival. The series of Free Trade Agreements over the last year has already put India in a different league. Those FTAs were a signal to the United States that India has the means and wherewithal to withstand the aggression heaped by Trump’s incongruous tariffs. India did not stop purchase of Russian oil nor did it offer concessions to placate Trump’s ego. Instead, New Delhi smartly moved ahead to forge economic bonds with all types of economies. The clincher came when the FTA with the European Union took final shape on Republic Day. And soon, Trump had his moment of epiphany! The remarkable resistance put up by India to counter the US shenanigans is a lesson in mature statecraft. Despite provocation by Trump officials using acidic language, despite the POTUS terming India as a “dead economy”, India showed tremendous restraint.

 

No exchanges, no verbal fight, just business as usual. The calmness has finally paid off, at least it seems so, with the announcement of a trade deal between the two major democracies by Donald Trump. It has sent cheers in the Indian markets even as details are awaited on the finer points of the deal. The Trump turnaround with immediate slashing of tariffs on Indian goods from 50% to 18% should clear the imaginary clouds in the Oval Office over the health of the Indian economy. The “dead economy” is not just walking but in the middle of a sprint. Its pace was realised by the EU which discarded its decades-old reservations over an FTA within months and joined India in the run. The US has also cleared the way to take the last lap towards closing the deal.

 

All that is needed is to clear the hidden hurdles which might pop up on the track due to the maverick attitude of the US President. The proposed trade deal is yet to be inked formally. There are still some pain-points which need tender handling. The deal was unilaterally announced by Trump through social media. A joint note is yet to come out about the modalities of the agreement. India has acknowledged the US initiative to take ahead the negotiations. Prime Minister Narendra Modi has also thanked Trump on behalf of Indians for lowering the tariffs. However, there is still no clear word about finalisation of a trade deal. The purposeful silence over the words ‘trade deal’ underscores persistence of some red-flags. India had been vocal about the security of its core sectors including agriculture, jewellery and dairy when the negotiations started with Trump’s team. Compromising interest of the vulnerable sector is still out of question for India despite the US pressure to open Indian markets for its agriculture produce. Union Commerce Minister Piyush Goyal has addressed these concerns by assuring protection to farmers and dairy business in the Government’s first official reaction to Trump’s announcement of a trade deal. How India has managed to protect its interests or how it is going to prevail in the last leg of negotiations will decide the success of the trade deal. A warning signal has already come from US Agriculture Secretary Brooke Rollins. Immediately after the proposed deal was announced by Trump, Rollins claimed that it will result in export of more American farm products into India’s massive markets. This claim has come even as the farming community in India is seeking clarity over market access to American goods including corn, ethanol and soyabean. It is still not clear whether India has agreed to import genetically modified produce and dairy items. International relations experts have categorised Rollins’ claims as another high-handed US official jumping the gun without actual knowledge. Ultimately, the devil will be in the details, if and when the two countries decide to bring them into the public domain. Clarity is needed on many unilateral claims by Trump including total pause on purchase of oil from Russia. India has not responded to it and Moscow has denied any official communication from New Delhi. These things will need a firm and resolute response from India. Strategic autonomy allows it to choose its trade partners but the Modi Government will also be looking to guard its diplomatic interests in the changing geopolitical landscape in EurAsia. As the markets cheer the reset of India-US relations and Trump’s willingness to stick with India, a cautious approach is advised over the exact future of the massive trade deal. At this moment, a broader framework looks ready but it is time to hold the bubbly and wait for the right moment to uncork it.