The good news first. India WILL get a trade deal, sooner or later, with the US, no matter which side of the bed Donald Trump woke up this morning, or any morning!
But while too much attention has been focused on Trump’s tariff tantrums, the fact is that India has not exactly been sitting on its bottom and waiting for the Americans to relent. And it’s not just about PM Modi’s sudden overtures to China’s Xi Jinping or taking that cuddly car ride with Vladimir Putin.
India has been quietly engaged in conducting backroom, or the front room in many cases, discussions for the last few months (in some cases, for years) for sewing up a trade deal. It may not have gotten its share of airtime or newspaper inches, but that does not reduce its significance when it comes to India’s quest for strategic autonomy in this suddenly changed new world order.
Of course, India has already signed two pretty big trade deals in the last couple of years—an ECTA or economic cooperation and trade agreement with Australia, as well as a comprehensive economic partnership agreement or CEPA with the United Arab Emirates.
While for Australia, India’s attraction stems from the massive domestic market it offers, for India, the country-continent down under offers prospects for the immense natural resources it has. And when it comes to a free trade deal with the Arab Emirates, the closer cooperation on offer could only solidify the historical social, cultural and economic linkages it has had with India for decades. In fact, Union Commerce Minister Piyush Goyal was actually in the UAE this weekend to evaluate the progress of the CEPA.
But one or two is just not enough, especially for a nation with major global power aspirations. For the record, India is presently engaged in trade talks, which are at various stages, with at least a dozen countries.
Of these, the one with the European Union or EU, is perhaps the most significant. This is because while the European common market is not only developed and big enough as one of the world’s pre-eminent trading bloc, for India, strategically, the EU not only promises great future forward business development prospects with a region sharing similar progressive, liberal, democratic credentials, it is also the perfect antidote to any vagaries in policy from Washington, whose flip-flops there seems to be no end to since Trump took over, and has rubbed even the normally tenacious negotiators from India the wrong way.
In fact, while Modi’s photo ops with China may have more to do with the slow dance of diplomacy and pressure tactics that India and US have been throwing at each other since the trade talks stalled back in August, the deal with the Europeans is considered not just as an ace up one’s sleeve, but as a plus plus that will help both regions benefit, but it is not without its own speed humps enroute.
Prime amongst that is the Europeans getting anal when it comes to environmentally sustainable business practices—its contentious Carbon Tax is set to rankle not just Indians once it comes into effect from next year. But Indian negotiators are not fazed by it. And face it, net zero is a bullet India Inc has to bite, so the sooner the better than later.
And talking of the Europeans being the next-best-thing, a preview will be on offer next month, that’s when India’s latest trade treaty comes into effect, with the four-nation European bloc called EFTA or the European Free Trade Association. It comprises four nations which are not part of the EU but have close ties with the bloc, as well as being well advanced and with prime future destination potential—Liechtenstein, Luxembourg, Iceland and Norway.
Meanwhile, discussions are proceeding with a clutch of nations, with deals likely soon with Oman, with Sri Lanka and Korea following soon afterwards (note that India already has an agreement with Seoul, and is now looking at upgrading it). The other countries include New Zealand, Chile, Peru and yes, of course, our ‘fraand’ Doland’s America.
