The economy of India is not big enough to hit back at the United States with higher tariffs on their products being exported to India.
Stretching arms wide and hugging world leaders has become the symbol of Prime Minister Narendra Modi’s global diplomacy! And the Indian media has time and again went overboard on this imagery and has spent long hours of airtime on the chemistry that the Prime Minister shares with global leaders, during their visits to India or Mr Modi’s visits to other countries.
But the real worth of Mr Modi’s chemistry must be assessed through the gains that India makes. A strong and growing economy, with a favourable trade environment will be one of the key benchmarks of diplomacy; and Mr Modi’s legacy will be assessed based on the value that it generates for the times to come. US President Donald Trump’s decision to literally open a new front in his ongoing trade war with countries around the world, as part of his “America First” policy, has the potential of having an adverse impact on India’s trade with America.
Our companies operating in the information technology space have already suffered at the hands of Mr Trump and his decision to regulate the visa regime; and now the announcement to revisit the preferential trade treatment that India enjoyed under the “Generalised System of Preferences” (GSP) is not a good sign, and comes at a time when the need is to further increase our exports.
Since this regime was launched in the 1970s, India is arguably the world’s largest beneficiary of GSP; and ending it now would be a strongest punitive action.
India, a country with high trade deficit cannot afford a setback on its export front. And the government must show the steel to ensure that the high volume of trade with America does not suffer any setback.
Mr Modi, who proclaims to have run the most favoured and admired foreign policy in the Indian history, must explain this emerging situation, which if not handled properly will lead into a disaster that India can ill-afford.
The economy of India is not big enough to hit back at the United States with higher tariffs on their products being exported to India. Therefore, India needs to work with the Trump administration and ensure that a status quo is maintained between the two countries on the trade front.
After nearly five years of multiple visits to the United States, the Modi government has a lot to answer on its chemistry with President Trump, and how this challenge will get mitigated. With the General Elections due soon, let’s hope the Modi regime does not use it as an excuse to delay its response to the Trump administration on its proposal to end GSP status to India.
The Modi government has recently claimed that the country’s trade deficit has narrowed since it took office; but what it probably forgot to state is the fundamental weakness that is getting exposed towards the end of this term.
The GSP status had helped small businesses in India to access lucrative market in the United States, and the Modi government is duty-bound to protect this preferential trade treatment in the best interest of the country.
(The writer is a political communications specialist; and has worked in Chhattisgarh, Telangana, and other states)