Context

During Mr. Trump’s visit to India on Feb 24-25, there is the prospect of more cooperation on trade and tariffs and also the possibility of major defence deals.

US-India Trade

• U.S.-India trade in goods and services has grown at a steady clip from $16-billion to $142-billion during 1999-2018.
• However, the trade growth is not without wrinkles. U.S. and Indian officials have disagreed for years on tariffs, foreign investment limitations, agricultural trade, medical devices, digital economy and IPR issues
• At the heart of Trump’s foreign policy strategy are concerns about the trade deficit that the U.S. has with its economic partners worldwide, although India does not rank among the top 10 in this regard.
• In 2019 India’s trade deficit with the U.S. of $23.3-billion is dwarfed by China’s corresponding figure of $346-billion

Chronology of U.S.-India trade squabbles

• 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
• Trump administration 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. 
• These measures are 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.
• 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.
• India has expressed its concern regarding restrictions on visas for highly skilled professionals seeking to take up employment in the U.S, even though laws that brought in restrictions, for example by imposing higher visa fees, were passed before Mr. Trump entered office.

Hope for a positive announcement on trade?

• There were initial signs that a “limited trade deal” might be hammered out when Mr. Trump and Mr. Modi meet. 
• However, the aspiration of trade deal fell through when it became clear that nothing on that scale would be finalised until after November 2020 US Presidential elections.
• There is however possibility of a “mini trade deal” or more simply a smaller trade package announcement. This might include an increase in India’s LNG imports from the U.S.
• An MoU for India’s gas importer Petronet to invest $2.5 billion in U.S. company Tellurian Inc’s LNG project, that was signed during Mr. Modi’s visit to Houston, is likely to be formalised during Mr. Trump’s visit

India – US defence prospects (during Trumps Visit)

• There is more positive news on the defence cooperation with the likely announcement during the visit of Mr. Trump of a deal for 24 Lockheed Martin-built MH-60R Seahawk Multi-Role Helicopters for the Indian Navy.
• These 24 helicopters, said to be worth $2.4-billion, are likely to be procured through the Foreign Military Sales route of the U.S. government. India’s Cabinet Committee on Security has cleared their purchase 
• India and the U.S. are also said to be in negotiations regarding India’s potential purchase of drones, additional P-8I long-range, multimission maritime patrol aircraft and also Raytheon intelligence, surveillance, target acquisition and reconnaissance (ISTAR) aircraft.

India – US Strategic prospects (during Trumps Visit)

• Trump has reiterated his promise withdraw US troops in Afghanistan with the prospects of US- Taliban deal
• This might lead to revival of the Taliban’s influence, Pakistan-based terror elements or Pakistan’s ISI gaining a stronger foothold in the power vacuum that will inevitably develop there. This could compromise Indian interests considerably

Way forward

• India should come out with well defines Strategic Policy in its western sphere, which includes maritime arena also (Western Indian Ocean).
• India should improve the competitiveness of its own industries to make its products & services attractive to consumers so that they are able to overcome obstacles imposed temporarily by foreign governments.