RSTV: THE BIG PICTURE- INDIA FIRST
Introduction:
External Affairs Minister S Jaishankar who was on a official visit to United States of America met his American counterpart Mike Pompeo and held talks on several bilateral, regional and global issues. According to agency reports External Affairs Minister has said that the sourcing of Military equipment is very much a sovereign right of India. This is a significant statement in the backdrop of India-Russia deal on S-400 Air Defence System signed last year. On the issue of oil supply from Iran he said Iran has been a very stable status quo power and India has been repeatedly assured that affordable and predictable access to energy will not change.
- Foreign minister S Jaishankar defended India’s decision to buy a missile defence system from Russia despite the threat of sanctions from the US, saying it was New Delhi’s sovereign right to make such a decision.
- In Washington on a three-day visit, his first as foreign minister, Jaishankar said India was discussing the concerns put forth by the US on India buying the Russian weapon system but refused to forecast the ultimate decision on the fate of the S-400 purchase.
- “We have always maintained that what we buy — the sourcing of military equipment — is very much a sovereign right,” he told.
- “We would not like any state to tell us what to buy or not to buy from Russia any more than we would like any state to tell us to buy or not buy from America,” he said.
- “That freedom of choice is ours and we think it’s in everybody’s interest to recognise that.”
- India agreed to buy five S-400 systems for $5.2 billion last year and Russia has said that delivery was on track.
- Under a 2017 law, the US imposes sanctions against countries over “major” arms purchases from Russia due to Moscow’s military involvement in Ukraine and Syria and alleged meddling in the 2016 US elections.
- Jaishankar hailed warm relations with the US but underlined India’s differences with Trump’s hawkish stance on Iran. “We view Iran from the east, and from the east Iran has been a very stable, status quo power,” Jaishankar said.
- For India, “we’ve been repeatedly assured that the affordable and predictable access to energy will not change,” he said, declining to comment further on discussions on Iran.
- The US has threatened sanctions to force all countries to stop buying oil from Iran as it seeks to curb Tehran’s influence in the West Asia.
U.S’s measures that affected India:
Series of measures that include:
- A refusal to revoke or waive tariff increases made last year on steel and aluminium,
- An ultimatum that India “zero out” oil imports from Iran by May 2 even without securing comparable alternatives, and
- The decision to withdraw India’s GSP (Generalised System of Preferences) trade status.
India’s measures that affected U.S:
- Tariff and Non-tariff barriers like the 50-60% duties on motorcycles and cars and 150% duties on American liquor that India imposes need a second look.
- In addition, the government will need to revisit some of its decisions like data localisation requirements and new e-commerce regulations, which were declared suddenly.
- While the U.S. must show some flexibility on India’s price caps on coronary stents and other medical devices.
- The U.S. must understand the cultural differences over the labelling of non-vegetarian dairy products.
- It is unlikely that the Trump administration will temper its “my way or the highway” approach to Iranian oil sales, and New Delhi will have to work closely with other countries to build alternative financial structures to avoid U.S. sanctions.
- Two other issues that the US side has specifically raised during the latest round of negotiations are the “treatment of Walmart after their acquisition of Flipkart”, and the problems on data localisation reportedly faced by companies such as MasterCard and Visa.
- Trump administration decided to withdraw GSP benefits for Indian exports in retaliation for Indian tariffs that the U.S. deemed to be prohibitively high.
Generalised System of Preferences (GSP):
- GSP gives developing countries easier access to the U.S. market and lowers U.S. duties on their exports.
- India is the largest beneficiary nation under the GSP scheme and exported goods worth $6.35 billion to the U.S. under the preferential regime last year.
- This is close to 10% of the goods exported by India to the U.S. While the Indian reaction to the American decision has been mild so far that the Commerce Ministry termed it “unfortunate”.
- Trump signed off on a presidential decree to that effect alleging, “India has not assured the United States that India will provide equitable and reasonable access to its markets.”
- It is bound to cause resentment in New Delhi, especially since U.S. Commerce Secretary had assured the government that benefits would not be cut off until after India’s elections, thus allowing the new government time to reflect on the issue.
India-US Trade in recent past:
- S. is India’s largest export destination, India is only the 13th largest for the U.S. due to “overly restrictive market access barriers”.
- While speaking at the Trade Winds conference organised in the national capital, India is already the world’s third largest economy, and by 2030, it will become the world’s largest consumer market because of the rapid growth of the middle class.
- S. Commerce Secretary highlighted that today, India is only the U.S.’s 13th largest export market, due to overly restrictive market access barriers.
- Meanwhile, the S. is India’s largest export market, accounting for something like 20% of the total. There is a real imbalance.
- However, The U.S. must see that average tariffs imposed by India (13.8%) are not much higher than those levied by economies such as South Korea and Brazil.
- Indeed, if bilateral ties are largely driven by technology transfers, arms sales, joint exercises, and foundational agreements on defence, this amounts to a deep but one-sided security relationship, and not a robust and multifaceted strategic partnership.
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