Cooling ties: Modi posing with Trump during a meeting in New Delhi in 2020. Even before the latter’s inauguration, jitters about US-India relationship had begun to replace complacency with first signs of trouble showing up in immigration. — AFP
EVEN as recently as November, when the US election outcome was clear, the mood in India was optimistic. The Hindu right wing, which supplies Prime Minister Narendra Modi with some of his most ardent supporters, held religious ceremonies to celebrate Donald Trump’s win.
Many in the analyst community cheered from the sidelines, expecting India to be a net beneficiary of new tariffs of 60% on all Chinese exports to the United States, which is what the president had promised during his campaign.
India’s challenge around the time of the vote was largely domestic: Cost-of-living pressures, especially high food prices, were taking a toll on urban consumption.
Growth was slowing rapidly; yet stubborn inflation was delaying monetary stimulus. As I wrote back then, the bigger headache for Indian authorities was tomatoes, not Trump.
While the domestic slowdown is still the biggest headache for policymakers, the drum beats of Trump’s trade war are no longer so distant. From even before his return as president, there has been some unease around how the relationship between Trump and Modi will evolve.
Their personal bonhomie was at its peak five years ago, with Trump showing up for the “Howdy Modi” extravaganza in Houston, and Modi returning the favour with a “Namaste Trump” spectacle in his home state of Gujarat a few months later.
But this time around, there was a palpable lack of enthusiasm – from Trump’s side. And it was noticed in India.
Rahul Gandhi, the main opposition leader, said in parliament that S Jaishankar, the Indian foreign minister, had been sent to the United States to secure an invitation for Modi to Trump’s swearing-in ceremony.
Jaishankar accused Gandhi of spreading a deliberate falsehood. “At no stage was an invitation (for) the prime minister discussed,” he said in a post on X, the social-media platform.
Aside from the political point-scoring, what is true, however, is that even before Trump’s Jan 20 inauguration, jitters about the US-India relationship had begun to replace complacency, with first signs of trouble showing up not in trade but immigration.
The “Make America Great Again” camp split down the middle on the issue of H-1B visas, which allow Indian-born software professionals to live and work in the United States pending permanent residency. Outsourcing firms from Bengaluru, India’s Silicon Valley, compete furiously for these visas for their employees to serve their biggest market.
The sense of foreboding worsened when, soon after moving into the White House, the new president passed a Birthright Citizenship Order, which has been temporarily blocked by a federal judge.
It denies US citizenship for children born to parents who aren’t permanent residents: Techies on H-1B visas can take years – sometimes decades – to obtain their so-called green cards.
Many young Indian couples in the United States opted for pre-term deliveries to beat the Feb 20 deadline in Trump’s order.
This is just the white-collar angst. At the other end of the immigration spectrum are undocumented workers. Between 2019 and 2022, Indians were the third-largest group to enter the US illegally, often via the risky “donkey” route of border crossing.
The fact that Trump sent back an estimated 104 of them in a military plane before Modi could have a chance to meet him during a much-anticipated visit to Washington shows that the US president wants to negotiate from a position of strength.
India has already offered a concession by agreeing to work with the White House to take back its undocumented workers, despite the political embarrassment the government will face back home.
Every incoming flight of deportees would shine a spotlight on the Modi administration’s record of employment creation: Why are so many Indians desperate to leave the world’s fastest-growing major economy? Don’t they have jobs at home?
That’s just one of the aces the US president holds as he looks to play trade and immigration policy cards to bargain for greater access for the likes of Walmart Inc to the Indian market.
The Modi government is already striking a conciliatory tone: Its annual budget on Saturday cut import tariffs on many products.
Additionally, it could offer to limit imports of crude oil from Russia, which the United States has sanctioned for its invasion of Ukraine.
It might even set aside national-security concerns – and ignore vehement opposition from local telecommunication companies – to allow Elon Musk’s Starlink Inc and Amazon.com Inc to offer satellite broadband services in the most-populous nation.
New Delhi might want a few things in return, like a mothballing of the US Justice Department’s bribery charges against Indian infrastructure tycoon Gautam Adani, a prominent Modi ally.
Separately, it would hope that Washington would not push it any further on allegations of organising a conspiracy to murder an American citizen on US soil.
India has said it’s recommended legal action against an individual it believes is involved in the plot.
Trouble is, nobody can predict if the concessions currently on the table will be enough, or whether the White House will ask for more.
After all, were Trump to pick his adversaries by how much they contributed to the US trade deficit, Asia’s old and new export powerhouses – China, Vietnam, Taiwan, Japan and South Korea – would all be juicer targets than a far more inwardly focused economy like India.
It’s that navel-gazing approach to trade, and the favouring of domestic corporate interests over foreign players, that has put a target on India’s back. — Bloomberg
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. The views expressed here are the writer’s own.
