GP Insights # 272, 29 February 2020
President Donald Trump was on his first official visit to India from 24-25 February. His 36-hour visit was a combination of optics in Ahmedabad and Agra, and formal talks in New Delhi. The most important takeaways were on the military and energy front, where both the countries agreed for technology transfer and expansion of cooperation in the nuclear energy sector.
The joint statement pronounced that there would be more cooperation and collaboration on the production of advanced military systems and strengthening strategic ties. Import of advanced military helicopters; a possible deal between Westinghouse Electric Co and Nuclear Power Corporation of India Ltd; an agreement between the Exxon Mobil Corporation and Indian Oil Corporation to develop better pipeline network for natural gas distribution; the reiteration of India’s importance in the Indo-Pacific and the UN, are the key takeaways.
What is the background?
For India, the visit was vital as it expected some progress in the negotiations on Basic Exchange and Cooperation Agreement (BECA), substantial defence deals, strengthening energy cooperation and projecting India-US bonhomie. Before the visit, India purchased 24 Sikorsky MH-60R naval multirole helicopters. The US had approved the sale of Integrated Air Defence Weapon System to India. There were, however, low expectations on a possible trade deal.
For the US, India is an integral part of its Indo-Pacific strategy. Trump administration had renamed the US Pacific Command as the Indo-Pacific Command, highlighting the position of India and the Indian Ocean in its strategic. An official visit would strengthen the US’ commitment to its stance.
Also, with 2020 presidential elections on cards, Trump would want the Indian diaspora in the US to support his candidature, and a visit to India could ensure the same.
What does it mean?
First, Economics remains a tough nut to crack. Before his visit, Trump hinted at the possibility of not concluding a trade deal with India before the presidential elections in the US. This was clear during the visit, when the two leaders did not ink a substantial agreement or deal on the trade front. India is demanding a resumption of export benefits under the Generalized Systems of Preferences and an exemption from high duties on aluminium and steel products. The US is against the imposition of high tariffs on its products and is also concerned with the trade deficit with India. The two countries expect an agreement by the end of this year.
Second, the Indian media portrayed the visit as a milestone in bilateral relations. The foreign media, on the other hand, had mixed opinions. While some of them focused on the attention Trump got in a foreign country; few others juxtaposed the timing of the visit with the violent communal clashes in the capital. Some media houses criticized the lack of any big outcome or an agreement from the tour.
Third, the question the trade deal continues to linger. The US will continue to pressurize India on trade-related issues, especially when the election is approaching. It is yet to be seen how India reels under punitive actions of Trump administration. There were many rhetoric statements on terrorism, Kashmir and the US’ offer for mediation between India and Pakistan. New Delhi will certainly not accept a third-party mediation in this issue. The Indo-Pacific and the Quad maintains a status-co. The talks did not move beyond ‘free and secure Indo-Pacific’, even though Trump mentioned about revitalizing the informal grouping.