Never closer and this is only the beginning!

Kamal Baruah *

American means business so Prez Donald Trump travelled eight thousand miles over Atlantic and took the opportunity while visiting India recently. Hundreds of thousands of people from Ahmadabad were coming out on the street in a historic display of Indian culture to honour the American President. He was welcome by 22 km long road show “Namaste Trump” from the airport.

There were more than a lakh people gathered at Motera, the world’s largest cricket stadium where President expressed his profound gratitude to India for its remarkable hospitality. He delivered a message to every citizen across India that American loves India, American respects India and America is faithful and loyal friend to the Indian people. Trump also praised India’s incredible economic rise as a prosperous democratic nation.

India now becomes world’s fifth largest economy after US, China, Japan and Germany. Its GDP growth has been the most phenomenal in the past decade that regularly achieving an annual growth of between 6-7 percent. The rise in GDP is largely credited to factors including urbanization and improvement in the efficiency and productivity of technologies.

Despite GDP falling to 4.7% in the third quarter in recent times, IMF and RBI have projected India to attain fast growth again. The world has confidence in India so does United States.

India’s fiscal deficit brings down from 5.2% to 3.5% in last five years and inflation came down to 4%. Despite India’s rise in GDP, the nation still faces the issue of uneven access to development. India continues to struggle with the issue of poverty. But Digital India has played a significant role in providing equal access to technology and other opportunities to the rural population.

India is a huge market for a billion people and US always demands for greater access to its market for a massive trade deal with the emerging south Asian power. US have given some Indian exports tariff-free access to the US market.

United States is now eying India, the gateway of Asia to stop China’s rise as the rival superpower. Over the past 70 years, China has made amazing achievements in economic development. India ($3T) is nowhere nearer to US in terms of their $22 Trillion economy. India’s total trade deficit is $103B in compare with US $616B. A trade deficit occurs when a country's imports exceed its exports during a given time period.

It represents an outflow of domestic currency to foreign markets, results a negative balance of trade (BOT). Every country wants to keep the margin lower. Significantly, bilateral trade for India has been increasing, with the US (ninth largest trading partner) recently surpassing China to become India’s biggest trading partner still China is India’s top imports resources and US for India in terms of export destination.

Mr Trump would have loved to sign a big deal that would help bridge trade deficit. A future trade deal is going to be tough as US engaged in a bitter tariff war on medical devices and a range of other products. US extend tariffs on steel and aluminium products but the deal didn't happen during President Visit to India.

We can't expect a nuclear deal every time. India is buying attack helicopters Apache, MH-60R and other US military equipment worth $3B. And another deal with Exxon Mobil will see India importing more Liquefied Natural Gas. India desperately needs energy security to feed its growth and it is looking to diversify its petroleum import portfolio anyway.

So far Russia is India’s biggest arms supplier accounting for 58 per cent. Trump repeated Washington's doubts over the security of Chinese tech giant Huawei's 5G technology. India and United States are to launch project Blue Dot (QUAD initiative with the US, India, Australia and Japan) to counter China’s Belt and Road initiative.

The slowdown of the economy in India, growing social unrest and the expected global slowdown may cast shadows on the relationship. India needs to keep Mr Trump on its side for strategic and security reasons.

The grand welcome to US president showed how serious India is about the relationship. But the immediate future depends on the upcoming US presidential elections scheduled in November. Mr Trump wanted to show people in the US that he is hugely popular abroad and capable of negotiating good deals.

America has become an important source for oil and gas that India needs. Donald Trump visit would surely benefit successful multilateral trade negotiations for reduction in tariffs on goods crossing international borders. US inked MoUs on energy sector, agreements on healthcare, a mechanism to contain narco-terrorism and defence cooperation to reduce trade deficit with India.

On the other hand Prime Minister Modi desperately needed some good headlines after controversial CAA and Kashmir's autonomy. India Inc now started seeing the impact of trade disruption following the Covid outbreak.

Can India fill up export market space vacated by China? US put efforts to get India to make meaningful concessions and at the same time India wants technology and investment from US for its development.

India has been going strategic and military relation with the Soviet Union to counter Pak-US relation since independence. US and India had retaliated in the past by raising import duties on their products. It has been over seven decades of cold war dynamics and India’s nuclear ambitions that India has recently overcome US barrier for trade after Clinton’s Visit in 2000.

India is never closer to US economy but India can make top three world economies in a couple of years. India’s economic rise after post-liberalisation stands a counter-balance to Chinese domination in Asia.

Trump’s visit to India will make possible to achieve a trade deal by the end of the year after undergoing constant negotiations. Both New Delhi and Washington recognise the growing convergence in mutual interest in cooperation and should aim for a win-win situation.