Win-Win Strategy with the US
In the wake of US President Donald Trump trying to reset global trade order by imposing reciprocal tariffs, India has rightly adopted a conciliatory approach instead of a retaliatory one
- In the wake of US President Donald Trump trying to reset
global trade order by imposing reciprocal tariffs, India has rightly adopted a
conciliatory approach instead of a retaliatory one. It goes to the country’s
credit to desist the temptation of joining hands with countries like China and
Canada and a couple of other European nations that are at the forefront of
waging a trade war against the US. On its part, India has kept all the doors
open for a negotiated settlement with an aim to create a win-win situation for
both the countries. So far, the country has maintained a stoic silence
notwithstanding a couple of provocative statements coming from the American
side. Instead, New Delhi seems to be busy identifying areas where US goods can be
chosen over the foreign goods in an attempt to bring down the trade deficit
with the country as much as possible. Hopefully, India’s efforts will bear
fruits, enabling the two largest democracies of the world to increase bilateral
trade to $500 billion by 2030 from the current $200 billion.
- Although there are apprehensions that Indian export could be
badly affected by the imposition of reciprocal tariff with the loss from MSME
steel and aluminium exports estimated at $5 billion and $1 billion respectively.
Exports of other items may also witness a similar downturn, which may affect
the country’s economic growth rate. But at the same time, there is no denying
that India’s tariff rate is higher than most of the countries. As per the data
provided by the World Trade Organisation (WTO), India imposes a 5.2% higher
tariff than the US. India’s agricultural tariff is 7.8 per cent higher than
what the US imposes on Indian farm exports. Many economists have already
expressed the need to adjust the prevailing imbalance in the trade between the
two countries for healthy and strong trade relations. Expressing the same
sentiment, Union Commerce Minister Piyush Goel has also urged the exporters to
move beyond a protectionist environment and to be bold enough to face any challenges.
- It is high time for India to ease the trade imbalance with
the US as much as possible without adopting an ill-conceived idea of
confrontation. It is time for New Delhi to carefully examine the possibilities
of having trade with the US on equal terms. Energy and Defence are the two
sectors which may help in a big way to substantially bring down the trade gap
between the two countries. For example, India has already agreed to purchase
high-tech F-35 fighter jets from the US, a decision beneficial to erase a big
chunk of trade deficit. Similarly, India may think of increasing crude purchase
from the US, which stands at a mere four per cent at present. So, India should
tread cautiously to formulate a win-win strategy.
