By T N Ashok
NEW YORK: U.S. Vice President JD Vance held talks with Indian Prime Minister Narendra Modi Monday as New Delhi looked to avoid the 27% American tariffs, but, negotiate a bilateral trade deal with Washington and strengthen ties with the Trump administration. Modi had established a personal rapport with Trump in his first term in 2017 when the Howdy Modi event took in place in Houston, and Trump’s spectacular show in Motera stadium in Ahmedabad subsequently named as Modi Stadium.
Vance, who is on a largely personal four-day visit to India, met with Modi at his residence in New Delhi and the two leaders “reviewed and positively assessed the progress in various areas of bilateral cooperation,” Modi’s office said in a statement. They also “welcomed the significant progress” in the negotiations of an expected trade deal between the two countries, the statement said. But apart from trade, discussions took place on threat from China and the Asia Pacific security. Vance was clear that India would have to take a clear stand in favour of Trump on China issue if India wanted to get some special benefits from the bilateral trade deal expected to be concluded by 2025 end.
The White House in a statement said that Vance and Modi set the terms for ongoing talks, “laying down a roadmap for further discussions.” It’s a sign that talks are moving forward but remain far from finalized, though Trump administration officials also spoke with their counterparts from India in a sign of the high level of engagement. The Trump administration has portrayed its strategy of tariffs as forcing negotiations that could limit the reach and influence of China, the world’s dominant manufacturer. Chinese President Xi Jinping who is on a tour of South East Asian nations warning the governments against any deal with USA bilaterally meant against China. This warning was meant for the Indian Prime Minister Narendra Modi also.
The U.S. is India’s largest trading partner, and the two countries are now holding negotiations aiming to seal a bilateral trade agreement this year. They have set an ambitious target of more than doubling their bilateral trade to $500 billion by 2030. If achieved, the trade deal could significantly enhance economic ties between the two countries and potentially strengthen diplomatic ties as well.
Vance’s first visit to New Delhi came amid the backdrop of U.S. President Donald Trump’s partially-paused tariff program against most countries, including India. Earlier in April, Trump announced a 90-day pause in which imports from most countries would face a baseline 10% tax so that there was time to hold talks and possible structure broader deals. Trump has been personally involved in talks with Japan, but India’s size and potential enable it to possible be a counterbalance to China, which is New Delhi’s main rival in the region.
Economists on both sides of aisle in USA and India see the fall out in relations between US and China as a big benefit to India as most manufacturers would seek to outsource their supplies hitherto procured from China to India that would cost much less to the US consumers and not hit their profit lines. A Chinese toy retailing at 25$ is now retailing at 200$ following the 245% tariffs US imposed on China.
China and India are the biggest suppliers of pharmaceutical products to US, but the temporary pause on these times has given much relief, but Trump has warned that he would revisit this category for a fresh round of tariffs — any tariff on pharma products from China and India would cause medicine prices to skyrocket and hit the average middle class wage earner very badly, experts say.
Statin is a common product sold in the US by India, and it has a huge consumption. Statins are blood thinners and are required by people with heart ailments, diabetes drugs are next on the list. So India is desperate for a relief on pharma products as otherwise its exports would become uncompetitive.
Trump has offered a solution to Indian pharmas, set up based in US and manufacture the drugs and face no tariffs. But Indian pharmas say its easier said than done, the plethora of regulations and tape to cut and strict conformity with standards etc will blow up the prices of drugs in the US and make Indian made drugs in US prohbitibe out of reach of the common man there.
Meanwhile, Modi’s office said that the two leaders “noted continued efforts towards enhancing cooperation in energy, defense, strategic technologies and other areas” and “exchanged views on various regional and global issues of mutual interest and called for dialogue and diplomacy as the way forward.”
Indian Foreign Ministry spokesperson Randhir Jaiswal said on Monday that Vance’s visit will “further deepen the India–U.S. comprehensive global strategic partnership.”
India is a major trading partner of the U.S. and an important strategic ally in combating the rising influence of China in the Indo-Pacific region. It is also part of the Quad, which is made up of the U.S., India, Japan and Australia and is seen as a counterbalance to China’s expansion in the region. Trump is expected to attend a summit of Quad leaders in India later this year.
Washington has long sought to develop a deeper partnership with New Delhi, which is seen as a bulwark against China. Modi particularly established a good working relationship with Trump during his first term in office, and the two leaders are likely to further boost cooperation between their countries.
Modi was among the first leaders to visit the U.S. and hold talks with Trump after he returned to the White House. During his visit, he hailed a “mega partnership” with the U.S., and kickstarted a negotiation process to minimize the possible fallout of Trump’s tariffs.
The two leaders also said they planned to grow their defense partnership, with India signalling compliance with the Trump administration’s demands, saying it will purchase more oil, energy and defense equipment from the U.S. Modi also has cooperated with Trump’s moves to deport migrants as India has accepted many of its citizens from the U.S. in the past few months.
Regardless, Trump targeted India with a 26% levy, part of which has since been paused. However, he has continued to call India a “tariff abuser” and “tariff king.”
The trade negotiations are especially urgent for India, which could be hit hard by Trump’s tariffs, particularly in the agriculture, processed food, auto components, high-end machinery, medical equipment and jewellery sectors.
Modi’s government is also hoping to attract investment from Tesla and SpaceX CEO Elon Musk. Last month, Musk’s Starlink entered into agreements with two of India’s top telecom operators to provide satellite-based internet services. Musk also indicated that he would visit India later this year after speaking last week with Modi, signalling that there could be progress in the electric carmaker’s push to enter the Indian market.
India is also a major defense partner of the U.S. It has in recent years embedded advanced American jets, helicopters, missiles and military gear into its armed forces. The two countries have announced plans to sign a 10-year framework later this year for strengthening their defense partnership.
The US is India’s largest trading partner, and the two countries have been holding negotiations aimed at sealing a new trade agreement this year. The talks had started before Trump early this month announced sweeping tariffs on all trade partners, including 26 percent levies on India.
Trump later paused the country-specific tariffs for 90 days. His administration framed the move as part of a grand negotiating tactic aimed at leveraging better deals with partners like India. Under the current deal being discussed, India and the US have set the ambitious target of more than doubling their trade to $500bn by 2030, while vowing to integrate supply chains and boost jobs in both countries. Vance’s first visit to New Delhi since becoming vice president in January also coincides with a rapidly intensifying trade war between Washington and Beijing, which is New Delhi’s main rival in the region.
Washington has long viewed India as an important strategic ally in combating the rising influence of China in the Asia Pacific region and has sought to strengthen ties in recent years. India is part of the Quadrilateral Security Dialogue with the US, Japan and Australia and is seen as a counterbalance to China’s expansion. Trump is expected to attend a summit of Quad leaders in India later this year. Modi had personally sought to establish a strong working relationship with Trump during the US president’s first term in office from 2017 to 2021. (IPA Service)
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