India and the global economy: Talk to the US while creating new markets

Whether or not a trade deal happens isn’t something entirely in the control of the government of India or its negotiators

Commerce minister Piyush Goyal said on Saturday that trade negotiations with the US are proceeding in a cordial environment even as he underlined that India will continue to assert that crucial national interests, especially of its vulnerable stakeholders such as farmers, dairy farmers, fisherfolk and MSMEs, are not compromised.

India’s strategy of not ceding ground in critical fields while trying for an amicable deal in trade talks is the optimum strategy available in the short term. This must be complemented by a strategic focus on diversification of export markets and boosting competitiveness. (Piyush Goyal X/ANI)

Whether or not a trade deal happens isn’t something entirely in the control of the government of India or its negotiators. The Donald Trump administration has established a reputation for flip-flops on its standards in such negotiations, and its approach to bilateral discussions is often to introduce a third element, which is not necessarily germane to the issues being discussed. The US’s unfair additional tariffs on Indian imports of Russian oil are one such example since no such duty has been imposed on China, which buys a lot more energy from Russia than India. While Indian exports showed remarkable resilience in September despite exorbitant tariffs in their largest markets, data did reveal some adverse impact on labour-intensive exports. It is only natural that US consumers would also have felt the pain of these tariffs.

India’s strategy of not ceding ground in critical fields while trying for an amicable deal in trade talks is the optimum strategy available in the short term. This must be complemented by a strategic focus on diversification of export markets and boosting competitiveness to advance national interests in the medium- to long-term. This task has to be done in an environment where trade is just one of the many uncertainties in the geo-economic order.