Evasive India-US trade deal and America’s 3 mighty ‘M’s: Can New Delhi afford to antagonise Trump?
It is said the US dominates the world with three vital, policy-guided instruments—military might and the powerful American military-industrial complex, the mighty dollar as the currency of international transactions, and the soft power projection and allure of Hollywood flicks. To sum up simply, a heady mix of military, money and the movies.
On at least two of these counts, India has taken positions against US interests, therefore becoming the object of Donald Trump’s ire, notwithstanding the endless parleys for a still-elusive trade deal between the world’s two largest democracies. Meanwhile, the US has shown alacrity in signing and sealing trade deals with India’s smaller neighbours, Pakistan and Bangladesh, with whom India’s bilateral ties have headed deep south in recent times.
In February, President Trump had strongly pitched the fifth-generation F-35 fighter aircraft to Prime Minister Narendra Modi to give a sharper edge to the Indian Air Force’s (IAF) shrinking fighter aircraft fleet. The IAF now fields just 29 fighter squadrons whereas the minimum fighter strength is required to be 43 squadrons to face the omnipresent spectre of a two-front war.
India’s need for a fifth-generation stealth fighter has become all the more urgent, not just because of China having already deployed its heavy J-20 air superiority fighter and the medium multirole J-35 fighter, but also because of China’s offer to sell 40 J-35 fighter aircraft to Pakistan, which will completely alter Pakistan’s air force asymmetry with India.
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Recent reports speak of India having turned down the F-35 offer, and rightly so because besides being a very, very expensive aircraft, it will forever be dependent on the US ‘updates’ to keep the aircraft up-to-date with the technological requirements. Absence of updates or laggardness in the 'updates’ will make the aircraft less and less effective.
Costing between $80 million and $110 million, the lifetime operational cost of a F-35 is about $1.5 trillion, which is exorbitant for a fighter with basic technology that is about two decades old.
The Indian position is not something that Trump will take kindly to—which perhaps is finding reflection in the uncharitable comments that he has been making against India.
Not opting for the F-35 will lead to two possible scenarios: India fast-tracking its own fifth-generation Advanced Medium Combat Aircraft (AMCA) on its own or with foreign collaboration. This will be a very time-consuming effort with no definite timelines. Or it may also choose the Russian multirole Sukhoi Su-57. Both these scenarios strongly militate against US interests.
A less than conducive India-US relationship will also put into question treaties like the 'US-India COMPACT' (Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology) for the 21st Century—a new ten-year key India-US defence partnership that would extend across space, air defence, missile, maritime and undersea technologies.
The other issue is that of the de-dollarisation move, something that the BRICS is vocal about.
India is a primary member in BRICS—a 11-membered grouping that has been growing in importance since its inception in 2009. It now accounts for about 55 per cent of the world’s population and 42 per cent of the world’s GDP. It is also increasingly seen as a voice for the Global South of which India has been a keen votary.
Commenting on the state of India-US trade negotiations on Wednesday, President Trump had said, “We are negotiating right now and it’s also BRICS. BRICS, which is basically a group of countries that are anti the United States, and India is a member of that if you can believe it...It is an attack on the dollar and we are not going to let anybody attack the dollar. So it's partially BRICS and it’s partially trade.”
But these aspects are only part of the problem. A key issue is the emphasis that the US has placed on India to open up its farm sector. India is reluctant because besides the huge political implications, opening up of the farm sector would have a far-reaching impact on India’s labour force, 46 per cent of which is engaged in this sector.
But to be fair to the US, it is among the very few countries which India has a positive balance of trade. And Trump’s announcement of imposition of 25 per cent tariff on India, along with penalties for buying weapons and energy from Russia, will deal a big blow to the Indian economy to the tune of at least $30 billion. That is a number India can ill-afford to disregard, particularly when the Indian economy is at a take-off stage for the big league.
Trump’s position is a significant assertion of the fact that India needs the US more than the US needs India. And this is particularly true in the case of high technology, electrical goods and related products that India imports from the US.
That may be the reason why ‘caution’ was evident in India’s foreign ministry statement on Friday while reacting to the US tariffs on India: “India and the US have been engaged in negotiations on concluding a fair, balanced and mutually beneficial bilateral trade agreement over the last few months. We remain committed to that objective.” Perhaps the only silver lining for diehard optimists would be the fact that the India-US trade deal is yet to be inked.
Defence