Mains Article

Dimensions encompassing Trump’s visit to India[Mains Article]

President Donald Trump’s recent visit is being hailed as very productive and the nations will keep working with for "a comprehensive trade deal" in future.
By IT's Mains Articles Team
February 26, 2020

Contents

  • Introduction
  • Significance in American context
  • Significance in Indian context
  • Deals inked during the visit
  • Disagreements
  • Conclusion

Dimensions encompassing Trump’s visit to India

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Introduction:

US President Donald Trump concluded his maiden trip to India from 24-25 February, becoming the seventh American president to visit the country. The event opens new dimensions to strengthen the bilateral relations and build long-term strategic partnership between the two nations.

Significance in American context:

1. Cementing relations:

  • In the perspective of the US, India is the largest growing and relatively open consumer market for American products and business.
  • Further, India holds a strategic location in the Indian Ocean and the alliance between the two nations is needed to gain prominence and strategic hold in the region.

2. Access to Indian markets:

  • Trade between US and India grew from $66 BN in 2008 to $142.6 BN in 2018 as a result of strengthening strategic ties between the countries.
  • US is striving for greater access to India’s dairy, poultry and e-commerce market.

3. Trade deficit:

  • The trade between the two countries presently, leans heavily in India’s favour.
  • US has been repeatedly mentioning it and will aim to balance this trade deficit by gaining access to Indian markets and seeking tax concessions in US goods from India.
  • The visit was expected to sign a trade deal that would help bridge the US $25.2 BN trade deficit with India.

4. Building Vote base:

  • The visit helps Donald Trump to build soft power and sustain support from 2.4 million Indian-American voter base in the US, in the upcoming US Presidential elections.

5. Defence Deal:

  • US sees India as a market for its defence equipments and weapons. Defence trade between the nation’s is the is the silver lining in the relationship between the two nations.
  • US-India Defence deal has surged from nearly zero in 2008 to more than $15 BN in 2019, which US aims to raise further.

Significance in Indian context:

1. Energy deal:

  • India needs energy security to feed its growth and it had been looking to diversify its petroleum import portfolio.
  • India is looking forward to import more Liquefied Natural Gas (LNG) from US.

2. Advanced Defence equipments:

  • India still imports a majority of its defence equipment and Russia owns more than 50% of the stock from the country.
  • India needs to diversify its defence portfolio and induct advanced defence equipments in its fleet and keep a balance between US and Russia.

3. Relaxation in visa norms:

  • India has expressed its concern on multiple occasions regarding restrictions on visas for highly skilled professionals seeking to take up employment in the U.S.
  • India had expected concessions in visa rules from US.

4. Countering China:

  • India is willing to put a high value on a strategic partnership with the United States, especially in the face of an increasingly assertive China and to counter Chinese imports in India.
  • For that reason, the India may be willing to make trade concessions for stronger ties with Washington.

5. Building Stature:

  • The visit adds accolades in the term of PM Modi and his smart diplomacy to avail the Superpower in its favour.
  • This help builds PM Modi’s soft power in the country and enhances India’s global image.

Deals inked during the visit:

India and the US inked the multi-dollar defence deal, signed 3 MoUs, including one in the energy sector.

1. Defence Deal:

  • India is to buy attack helicopters and other US military equipment worth $3bn.
  • There has been a defence deal on other things including Indian procurement of 24 MH-60 Romeo helicopters from the US at a cost of $2.6 billion.
  • Another contract was signed to acquire six AH-64E Apache helicopters for $800 million from the US to enhance joint military capabilities.

2. Energy Deal:

  • India and the US have decided to boost trade in crude oil and liquefied natural gas (LNG) and also strengthen technology partnerships in the energy sector.
  • The move will support India’s plan for $60 billion worth of investments in developing infrastructure for a cleaner, gas-based economy.
  • US firm Exxon Mobil and Indian Oil have signed an agreement to help India import more Liquefied Natural Gas (LNG).

3. Enhancing cooperation:

  • The countries have vowed to seek co-operation in fighting radical Islamist terrorism and resolved to eliminate terror operations on Pakistan soil.
  • India and US discussed 5G technology and the importance it holds for the future.

4. MOUs:

  • The United States and India signed three agreements:

1. MoU on mental health

2. MoU on safety of medical products

3. Letter of cooperation between Indian oil corporation and Exxon.

Disagreements:

  • U.S. and Indian officials have disagreed for years on tariffs and foreign investment limitations, and other important matters particularly within agricultural trade.
  • Concern for intellectual property rights has preoccupied the U.S. for thirty years, while issues concerning medical devices and the fast-growing digital economy have more recently emerged.

Imposition of tariffs:

  • In March 2018, the Trump administration slapped national security tariffs of 25% on $761-million worth of steel and of 10% on $382-million of aluminium imported from India.
  • Despite formal World Trade Organisation disputes initiated by India protesting these tariffs, Washington ended a year-long review of the U.S. Generalised System of Preferences (GSP) in June 2019 by removing India from the tariff concession system.
  • This is said to have impacted nearly $5.8 billion of India’s exports, or more than 12% of exports to the U.S. in 2017.
  • India immediately imposed higher retaliatory tariffs on 28 U.S. products including almonds, walnuts, cashews, apples, chickpeas, wheat, and peas.

Reducing trade concessions:

  • The U.S. also recently changed the status of India, among other countries, to a “developed country”, to further reduce trade concessions that it could receive from the U.S.

Entry of US dairy products in India:

  • The visit was likely to include allowing for market access for US dairy products in India, but was not finalised.
  • The move, however infuriated the farmers of India as they fear cheap dairy products of US will flood Indian markets which will hamper the interests of Indian dairy farmers.
  • The dairy sector provides employment to the rural workforce and is a significant contributor to the national economy.

Unfinished Trade Deal:

  • The much touted “US-India trade deal” could not be hammered out during the meet and is expected to be finalised only after the November 2020 U.S. presidential election.

Conclusion:

  • The visit was significant to cement the bilateral ties and have kept the hopes high for further economic, security and military pacts between the two nations, working towards the common aim of keeping the national priorities ahead and looking forward for stronger engagements in future.
[Ref: The Hindu, BBC, Economic times]
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