Both globally as well as within India, there is dread at what April 2 will bring. The deadline for US President Donald Trump’s slapping reciprocal tariffs on nations that trade with the US has led to consternation amidst India’s trade and economic policy circles, especially considering that he has singled out India repeatedly, calling it anything from ‘big abuser’ of bilateral trade, as well as ‘tariff king’.
Perhaps, we needn’t worry that much.
US trade negotiator Brendan Lynch will wrap up his three-day parleys with Indian officials today, and while the specifics will be keenly anticipated considering the whole April 2 ‘liberation day’ approaching, it has to be kept in mind that these discussions are not directly aimed at staving off any American punitive tariffs next week, but for the larger India-US bilateral trade agreement (BTA) which has a best-case scenario deadline of coming autumn only.
But India’s ace up its sleeve, even if it doesn’t realise it, is the fact that Washington itself desperately wants to sew up a deal with New Delhi.
“What underpins the growth path is the sheer magnitude of opportunities for both countries to collaborate, which should steer the bilateral trade towards the next phase of growth,” said Naveen Aggarwal, US India Corridor Leader with KPMG in India.
The reasons are not hard to find. While it is a given that Trump’s riding roughshod over the global trade ecosystem will make India feel the pinch—for example, his blanket tariffs on auto imports will hit Indian auto ancillaries rather than manufacturers—the reality is that main antagonist America is aiming at is China and how to clip its wings. And then, to put neighbours and friends (Europe, as also neighbouring countries like Canada and Mexico who have happily become manufacturing hubs for products aimed at the US) in their place.
But when it comes to India, despite the colourful epithets the Trumpeter has gone full horn on right through his campaign period, there is a different approach. While American businesses would want easier access to the vast Indian market, the US establishment would want India on their side in the coming churn—of the global world order.
“Certainly with some countries, we're going to see new tariffs that the US applies,” said Mark Lanscott, senior adviser with the US India Strategic Partnership Forum who was the lead US negotiator with India during the first Trump administration. “(But) I don't think that that applies so much with India. I think that there's an understanding in the administration that both sides have to win, that India has to gain from this negotiation as well.”
Aggarwal agrees. “US-India partnership has been defined by a broad based and multi-sectoral partnership across strategic and commercial areas. 2024 has been a record year in terms of bilateral trade and with that, the joint ambition of 500 billion dollars by the turn of this decade remains as relevant as ever.”
“The continued bilateral momentum on the service industry, be it in IT/ITES, Fintech, GCCs', amongst others offer potential for newer avenues of incremental growth in both markets,” added Aggarwal of KPMG. “(But) The rules of engagement going forward are expected to be more deals and more negotiations, with India becoming a bigger buyer of US products.”
