According to Richard Rossow, the Chair of India and Emerging Asia Economics at the Centre for Strategic and International Studies (CSIS) and a leading authority on India-US economic relations, Washington’s punitive actions would not significantly affect India’s growth but would instead give the nation a “unique opportunity” to diversify its markets and implement significant domestic reforms.
“We’re discussing a rather tiny portion of the Indian economy. Only over 14% of the GDP is derived by manufacturing. Agriculture employs the majority of labor. Services make up the majority of economic output. Additionally, the foundation of many of our business relationships between the US and India continues to be IT services. Keep in mind that the basket does not contain the great majority of India’s economic activity, whether it be labor or economic production,” Rossow stated.
India’s reaction of expanding its export markets and implementing significant domestic reforms, he contended, “makes a lot of sense.”
“I do understand, while certainly hoping that the repair can be made, a trade agreement can be inked and commercial ties can grow, India needs to strike out in other directions and build more significant economic partnerships,” he stated.
“Keys to growth in India do not lie in a relationship with the United States or a trade agreement with anybody,” Rossow emphasized, but rather in domestic changes, particularly states.
“So many important improvements still need to be implemented. They have the power to enhance labor marketplaces. Fix a number of the fundamental issues that will keep the economy running smoothly and spur industry. I think businesses will move to India for the domestic market if those things get better and go correct, regardless of how our governments’ ties turn out,” he said.
Rossow added that Washington’s move to impose secondary tariffs was probably a “negotiating tactic” meant to get a better agreement with New Delhi.
“The Trump administration, in my opinion, has two goals. One is pressing India on some market access issues that they were unwilling to resolve in order to persuade them to finish the trade agreement. The second is to exert more pressure on Russia. It certainly feel like India is being singled out, he continued, “but the fact that you haven’t seen the same tariffs put against China, Turkey, and other major energy buyers.”
The US Treasury Secretary has repeatedly accused India of “profiteering” from Russian oil, claiming that since the start of the conflict in Ukraine, China’s share of Russian oil imports has slightly increased while India’s share has increased dramatically from less than 1% to about 35% to 40%.
India has defended its strategy, arguing that its purchases served the interests of the nation and protected its strategic independence.
Rossow continued to hold out hope for a potential deal in the near future.
“I believe there is yet hope. Neither party has declared that it intends to halt talks. Both sides are giving me the impression that they are still looking for a way ahead. India hasn’t retaliated yet. They have a lot of instruments at their disposal to sweeten the pot as they look for a way forward,” he continued.
Rossow noted that it might not be the “best scenario” right now for Prime Minister Narendra Modi and US President Donald Trump to speak over the phone to resolve tense issues.
“We have witnessed leaders interact with President Trump. Meetings can occasionally be friendly and pleasant, but they can also occasionally take quite unsettling turns. You never know, then. Additionally, he emphasized that “it can be a dangerous moment unless India can get a lot of detail and information about what’s expected to transpire.” The Trump administration is notorious for not always communicating what the agenda looks like ahead of time.
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