- 3 months ago
At India First, experts weigh in on trade hurdles, diplomacy and South Asia’s shifting power dynamics against the backdrop of US President Donald Trump’s remarks on India.
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00:00So what should one make of President Trump's statement about going to have a trade deal with India?
00:05His praise of Prime Minister Narendra Modi being tough, trade negotiations, punishing Pakistan terror?
00:11What's he referring to?
00:12Let's try and decode Trump's statements and this hyphenation between India and Pakistan,
00:18saying both these guys are tough, the leadership is tough in both the countries.
00:21Joining me on India first is Pramit Pal Chaudhary, head of India Practice Eurasia Group.
00:26Dr. Mohan Kumar is former ambassador to France and Bahrain.
00:29And also with me, Jain Krishna, former CEO, PM Skill India Mission and senior fellow at the CSIIS.
00:35Pramit Pal Chaudhary, when Trump calls Prime Minister Narendra Modi tough,
00:39is that in context of trade negotiations or Operation Sindhur?
00:44Well, he's actually called him tough even before Operation Sindhur and before the trade negotiations began.
00:50He's said that quite often in the past, even in the campaign last year where his presidency had mentioned,
00:57and I think he's confused these meetings, that he had spoken to Modi in the first Trump administration about Pakistan.
01:06And he had quoted Modi as saying that, you know, we've beaten them before and we'll beat them again.
01:12So this is a standard line and something that is deeply embedded in his thinking about Prime Minister Modi.
01:17So there's nothing complete, very new about this.
01:20Sindhur, I think, has only strengthened that.
01:23Trade negotiations possibly as well.
01:25But Trump himself, should we say, has not been directly involved in the trade negotiations going forward.
01:34But trade, I think, in his view, is something that he is tough about more than anything else.
01:40Dr. Kumar, does the statement indicate U.S. tried to dangle the trade deal, you know, the carrot,
01:47but Prime Minister Narendra Modi said, no, we will fight?
01:50And would that indicate that trade deal carrot did not work,
01:54even though India officially claims there was no conversation around trade during Operation Sindhur
01:59in any conversation with the Americans?
02:01So thank you very much for having me.
02:04I've always felt you should take President Trump seriously, but not literally.
02:09And if you're going to take him literally word by word, you will tie yourself up in knots.
02:14So I would suggest to you that I think we focus on the trade deal.
02:19And there I think he has refrained from criticizing Prime Minister Modi.
02:24I don't think he has ever criticized Prime Minister Modi.
02:27Even he has been, as far as being critical of India, he's only called our economy a dead economy.
02:33But other than that, I don't think he has been critical at all.
02:37I think India has handled the trade negotiations, from my perspective, very well.
02:42We have not sought confrontation, but we have not capitulated.
02:46And we have tried to keep the conversation going without getting into a slanging match on every statement that he makes.
02:53So that's absolutely the right strategy to follow vis-a-vis President Trump.
02:58And obviously, we have stuck by the red lines that Indian government has conveyed.
03:04And that is why President Trump is saying that Modi is tough, Prime Minister Modi is tough.
03:10So all in all, I only take this particular aspect that I think we have reached the final lap of the trade negotiations.
03:19And as a former trade expert, to me, it's important that we finish the crossing line on trade.
03:26Because I think you could have all sorts of issues with the economy.
03:30It'll be great if we can get this out of the way so that we can focus on the FTA negotiations with EU and other things.
03:38Okay.
03:38And Jayant Krishna, Trump saying Prime Minister Narendra Modi said, no, we will fight.
03:43If we were to take him seriously, but not literally, as Ambassador Mohan Kumar puts it, two things seem to emerge.
03:51One, India called out Pakistan's nuclear bogey.
03:54And two, even if the Americans dangled a trade deal carrot, that did not work.
04:00Operation Sindhuur is still on.
04:02And there is no trade deal yet.
04:03Okay, I think you're on mute, request you to unmute yourself, sir.
04:13Gaurav, so I think, you know, President Trump should not be taken too seriously beyond a point.
04:17You know, I mean, what he talks on his social media platforms depends on which side of the bed he gets up from.
04:24I mean, let's not forget in the past, he has talked about India being a failed economy.
04:27He has said that India and Russia, he has lost to China and all kinds of things.
04:32And he has been consistent with his praise of Prime Minister Modi, you know.
04:36So I think, to my mind, linking it with the, you know, the Pakistan conflict, which is fortunately over, doesn't make any sense, much sense from the point of view of, you know, which way the trade negotiations are going on after last lap of discussion that Commerce Secretary Rajesh Agarwal had in the US.
04:53I think that is very, very important. And what are the irritants which are remaining, which are yet to be sorted?
04:59I think those are very, very important, you know.
05:01Some of the irritants, to my mind, which are yet to be sorted, of course, Government of India does not divulge, and rightly so, as to what discussions happened in the last round of meetings in the US.
05:11But, you know, the other section 232 tariff, you know, which links, you know, which are related to the US national security, you know, which covers products like aluminium, steel, car, auto parts, you know, timber, furniture, and so on and so forth.
05:27I think, what is the discussion on that?
05:30Because, if you remember, you know, initially on steel, the duty used to be 25%, and on aluminium, it used to be 10%, which he had imposed in his last innings, 218.
05:40This year, in February, on both the products on steel and aluminium, it became 25%.
05:45And with the additional tariff, it became 50%.
05:48Now, at this level, even at 25%, you know, the export to US of these two products doesn't make sense at all.
05:54It doesn't remain competitive.
05:55So, where it stops, I think that's very, very important.
05:57Some of the issues on agriculture and dairy and those kind of products, I believe there has been some softening on India's stance on non-genetically modified corn and soya and so on and so forth.
06:10I hope there's some way forward to, you know, for, you know, freezing these kind of things also.
06:16So, Pramit Pal Chaudhary, let's take this step by step.
06:20Trump seemed to indicate that there's a trade deal that will happen with India.
06:24Now, Prime Minister Modi was in the US in February.
06:27Since July, we are told, trade negotiations almost done.
06:31Recent indications post a conversation between Trump and Modi.
06:35Do you see a trade deal happen?
06:37Is it on the cards?
06:39Or will it also depend, in your view, whether President Xi, what's the outcome of President Xi and President Trump's conversation in South Korea?
06:49So, in June, we had a deal with the United States in the sense that both trade negotiating teams had come to an agreement.
06:58It was sent up to the White House.
06:59The White House rejected it.
07:01In other words, President Trump rejected it.
07:03And so, the original plan for an announcement on July 1st got canceled.
07:07I think we are now back exactly to the same place.
07:09A deal has been, from what I've heard, more or less worked out.
07:12It has been sent up to the White House for clearance.
07:15There are possibly one or two minor issues.
07:18But keep in mind, Trump has a habit.
07:20And this is, I'm less concerned about the China deal than I am about what has been signed with the ASEAN countries, Southeast Asian countries.
07:27Because they have accepted more liberal opening up to American farm exports, but accepted tariffs on the range of about 20 percent, or effective average tariffs for goods.
07:42In effect, what I'm hearing is that the White House is saying, well, if the Indians are saying they want a 16, 15, 16 percent effective tariff rate, but are not giving us, giving America as much agricultural access as ASEAN, how does this work?
07:56So, you should accept at least what the Southeast Asian countries are doing.
08:00So, that, I think, is the last bit that we're sort of waiting to hear about.
08:04And it's not impossible that we may see our effective tariff rates increase a couple of percentage points before the final deal is done.
08:12But my sense would be, and as I said, President Trump is really the joker in the pack because he comes in and can often make very whimsical decisions, which his own administration are baffled by.
08:26I would say that there's a very good chance of it coming to at least an announcement before the end of this year.
08:32So, an announcement that there is a trade deal in place, you think happens by the end of this year, around 20 percent.
08:40But with those concessions that they're seeking on agriculture and dairy, or without that, what are you picking up through your sources, sir?
08:50It would have to be with those concessions.
08:52Otherwise, America will not sign.
08:54You have to understand that for Trump, his looking at his core farm base, which is in the American Midwest, the states of Iowa, Kansas, Nebraska, and so on, these are corn, soya producing states.
09:10We have conceded, for example, on apples and almonds, but apples and almonds are grown in California and Washington, which are democratic states.
09:16He doesn't care about those.
09:17So, for him, it's absolutely essential that we look at these type of products for him to be able to sell that politically at home, or for him to be even interested in a trade deal with India.
09:29But what we are hearing is that the actual corn and soya grain, India has said we don't accept genetically modified crops, but the products that are produced, the oil, the soya bean oil, we are the world's largest importer, soya bean oil.
09:47We need livestock feed, because we have low dairy productivity issues, and that means corn and soya cake, which can be sold and fed to our animals.
10:00We do need that.
10:01We have to import about 14 to 20 million tons a year.
10:04On these, we can agree to, and that's where I think the deal effectively is being made.
10:09Dr. Kumar, your assessment of Trump's statement, doing a trade deal with India, is there more clarity when and on what terms?
10:18And does Trump follow this G2 US-China conversation that is happening, and where does that leave India in your view?
10:28What happens, does a lot depend on the outcome of President Trump and President Xi Jinping conversation tomorrow?
10:34I think that we will see a trade deal before the end of the year, so I agree with other panelists who have said more or less the same thing.
10:43On China-US, I'm glad you asked this question.
10:46My sense is that President Trump himself has come to an assessment that India, the costs of alienating India far outweigh the benefits.
10:57That is my sense, frankly.
10:59And tomorrow's meeting or today's meeting with US-China, I do not believe it's going to be a complete 360-degree deal.
11:09It's going to be an interim deal because the Chinese are not going to give on a platter a complete relaxation of restrictions on rare earths and magnets.
11:19So they will hang the Damakul's sword on the US, and the US will also not be able to tell China, we will give you the best chips completely free of restrictions.
11:31So what you are going to see is, at best, a truce.
11:36In these circumstances, my sense is, geopolitically, I think President Trump will also be more inclined to sign the deal with India.
11:45This is an assessment that I've seen, and that is the main reason why the US has changed, frankly.
11:51I mean, trade, 90% of it is trade, but this trade deal, everybody knows, is not about trade.
11:57It's about Russian oil.
11:59It's about the US-China relationship, as you say.
12:02It's also a question of the US now wanting India on its side.
12:07It will not be permanent.
12:09It will still be a tug of war.
12:10But I think there has been a changed assessment in D.C.
12:14Okay, Pramit Pal Chaudhary, before I bring in Jayankrishna, your reading of India-US relationship currently at a time when US relationship with Pakistan seems to be improving,
12:27and he calls Asim Munir his favorite field marshal or words to that effect, and he gets Shahbaz Sharif to praise him.
12:34Where does that leave India-US relationship if you have US so close to Pakistan, or Trump so close to Pakistan?
12:42Well, I think, yes, that's the key difference.
12:44Trump is very susceptible to, should we say, ego massaging, and that's what the Pakistanis have basically done.
12:52They also seem to have dumped a lot of money into crypto schemes that are directly supported by Trump's inner circle and his family, also a good way to win points with Trump.
13:04But the point is that after that, your problem for Pakistan is they have almost nothing to offer the United States.
13:11Trump, the administration as a whole, looks at Pakistan and says, what do you bring to the table?
13:17You are not strategically important now that the Americans have left Afghanistan.
13:20The Pakistanis have offered oil.
13:23The British began looking for oil in Pakistan in 1915.
13:28ExxonMobil, Aramco, Sino-Pec, CNPC, Total have all looked for oil in Pakistan.
13:34There is no oil in Pakistan.
13:36They offered minerals, but the minerals are deep inside Balochistan,
13:40and the Chinese have attempted to mine them and have had their engineers killed, kidnapped by the Baloch rebels.
13:47There is no economic benefit that Pakistan can offer the United States,
13:53and there's very little strategic benefit that they can offer.
13:56So the problem with Pakistan is that you can woo the president, yes, and he can make these statements.
14:03But on the ground, what matters with the Trump administration is not what the president says, but what the administration does.
14:10And my sense is that Pakistan is simply running out of things to offer the United States that is practical.
14:18Trump himself now is no longer talking about Indo-Pakistan peace and a ceasefire and trying to win a Nobel Peace Prize through that.
14:25He's now saying, I'll try to broker a deal between Pakistan and the Taliban.
14:29Have fun trying to do that, because you can be assured the Taliban will pay absolutely no attention to that offer.
14:36Oh, absolutely.
14:37And I believe even as we speak, there's an incident that's taking place in Khaybar Pakhtonkhoa.
14:42That's what we are learning from sources.
14:44We'll get you more information on that.
14:46But, Jain Krishna, a trade deal with India is also in the interest of the United States of America.
14:52Your reading of U.S. inclination towards Pakistan, is it only Trump and Aasem Muneer?
14:59As Pramit Pal Chaudhary said, Pakistan doesn't have much to offer.
15:03Ultimately, Trump does realize that America needs India, though in Japan there was almost no conversation about Indo-Pacific.
15:13So, Gaurav, you know, I'm not much concerned about, you know, successive, you know, honeymooning by various American presidents vis-à-vis Pakistan.
15:21You know, they keep on throwing a few million dollars here and there directly or through international agencies.
15:28But the fact is, you know, as the other panelists also mentioned, I mean, there is no serious economic benefit that Pakistan can offer.
15:35So, I'm not concerned much on that front at all.
15:38All I'm concerned is that, you know, in the current round of negotiations or the next round of negotiations, you know, where does this tariff settle down?
15:46If you look at today, it's 50%, out of which 25% is a penal, you know, tariff, which should go anyway because we have already started, you know, lowering our import of crude oil from Russia after sanctions against those two large companies, right?
16:02So, where from between 10% and 25%, where it settles, that would actually determine, you know, determine as to how competitive our exports to the U.S. remain.
16:12If you look at UK and Japan, they have about 10%.
16:14European Union has about 15%.
16:17You know, countries like South Korea also has 15%.
16:20Sri Lanka, Vietnam, Taiwan have 20%.
16:23Indonesia, Malaysia, Philippines has 19%.
16:26So, between 10% and 25%, these are the countries with whom we compete for exports to the U.S.
16:32I think where it settles is going to be, you know, to my mind, eventually it will settle anywhere between 15% to 20%.
16:40I think that's what India's entire focus has to be, that, you know, the lower it is, the more beneficial it is, obviously, for the Indian exporters.
16:49And that's what the entire focus of negotiations going forward from Indian side should be, to my mind.
16:54Interesting, you say, now that, you know, there are penalties on the two Russian oil firms, getting oil from Russia, clearly, and there are sanctions.
17:05So, India will look for other options.
17:07But what about Pramit Pal Choudhury, the deal with Russia on that narrow-body transport aircraft?
17:14Do you see trouble with America on that?
17:17Or, you know, with that, our relationship with Russia also remains good, and with America?
17:22So, the Superjet, I think, is an—let's see how it works out.
17:29The problem with the Superjet is slightly different, I think, because it's built by Sukhoi,
17:33which is a company that is sanctioned by not just the U.S., by the EU.
17:39It means Indian airlines who try to buy it, but who have to deal with foreign destinations, IATA regulations, and so on,
17:50will simply find it very—will be very reluctant to buy it, including the fact that Indian banks will not be able to finance it,
17:58insurance companies will not be able to insure it.
18:00I think this is a longer-term game.
18:02If this aircraft—you're really looking at an aircraft that can be sold maybe three or four years down the line,
18:10in which—by which time there will hopefully a ceasefire in Ukraine and sanctions have been lifted.
18:15So, that's the real—I think the bigger story will be is that as we reduce our dependence
18:20or reduce our buy—purchases of Russian oil, we have many other options.
18:24Hardy Puri, the minister, oil minister, said we have 40 countries offering us oil.
18:29Iraq is offering it at a price even lower than Russia.
18:32There's going to be other products, and notably, I think, fertilizer.
18:35You're going to be seeing a large import of urea coming in,
18:39which will be, in many ways, sort of compensation, if you wish, for the oil.
18:43Urea and fertilizer and all agricultural products are exempt from sanctions.
18:47And that's required not just by India, but by Global South,
18:53and that's something that India has constantly pushed for.
18:56Ambassador Mohan Kumar, can I draw you in for a moment on one part of what Donald Trump said,
19:01where he said, I am reading, I am reading that seven shining new planes were shot down.
19:0819th of July, and let me take you back, that time he said he was hearing of four to five jets shot down.
19:15Now he says seven shiny new jets were shot down.
19:19Not once has he said Indian jets.
19:21Pakistan claimed it shot down Indian jets.
19:24Indian air chief went on record to say India had shot down several Pakistani planes,
19:28including an airborne early warning system in the air, multiple on ground, including F-16s and JF-17s.
19:35What do you make of the American president's claim?
19:37Well, I make nothing much, actually.
19:40As I said, I would take him seriously, but not literally.
19:44The seven could be distributed between the two countries.
19:46It could be five on their side, two on our side, frankly.
19:50And this has been a bit of an issue, I would say, very frankly to you, even in our narrative, frankly.
19:56And I think both we could have done a better job in terms of actually listing out exactly what we did.
20:03So I would say that now there is much water that has gone under the bridge, and therefore it's futile kind of to focus on how many jets.
20:12It's very clear that India has demonstrated air superiority.
20:17I'm only saying we lost the narrative a little bit at the beginning, but I think everybody is clear that we were able to demonstrate superiority.
20:24I just want to conclude this segment by saying, for me, the trade deal is important, following which I also think it's important for the two leaders to meet.
20:35Because there has been so much of back and fro in the relationship, I want the relationship to be now back on an even keel.
20:44And therefore, it's important for the two leaders to meet.
20:47I understand it's maybe difficult for them to meet this year, but sometime next year, perhaps, if we can manage to host the Quad Summit and get President Trump to India.
21:00Because I think with a leader like President Trump, it's vitally important that he establishes that rapport with President Trump.
21:11That is now, there is a bit of a hiatus in the conversation between the two leaders.
21:15In-person conversation has not happened since February.
21:19I am keen that that take place.
21:21And it's only then that I think the relationship can be expected to go from strength to strength from there.
21:28But, you know, though I was supposed to take a break, but Prabhupada Chaudhuri, permit me 30 seconds to take a leaf out of what Ambassador Mohan Kumar said.
21:36It's very risky to meet Donald Trump because you wouldn't know what he would say next.
21:40And what impact will it have on next elections, whether it's Bihar now or next year?
21:46There are a series of state elections and each election extremely important.
21:50So, does this indicate, one, if India really cannot trust what President Trump will say, then three years of his tenure, it's better to stay away than risk a meeting?
21:59Or can things change?
22:01Well, that's one of the risks you're going to have to do as a statesman, I think, because, but there are a couple of things to point out.
22:08One, the evidence so far, and I believe that's an assessment by a number of governments, including our own, is Trump tends to go off the rails in telephone conversations.
22:17If you look at the transcript, for example, of his phone call in the first administration with Malcolm Turnbull, the Australian prime minister, where at the end of it, Trump slams the phone down and screams that this is the worst phone call I've had of the world leader.
22:31But he tends to be very congenial when he meets you face to face.
22:37And so far, the evidence is that when he's face to face, he's like a real estate guy selling his apartments to you.
22:43And he tends to be nicer and more sensible than he is on a phone call.
22:47On a phone call, he can, you were quite right, he can go off in very strange directions.
22:52And one person who's been very nervous about this has been Xi Jinping.
22:55Xi Jinping has refused to meet him since he's been sworn in until now, until this Thursday, right?
23:03Because when you talk to Chinese diplomats, they're very nervous about this.
23:07They're very nervous that you end up with a crazy Zelensky-type press conference, in which, of course, it would be a huge loss of face for Xi, but would almost certainly result in the U.S.-China relationship going off a cliff.
23:20So I think for Modi, the game is, yes, at some point I have to meet this man.
23:23Remember, he had a very good summit in February.
23:26It worked out reasonably well.
23:28But I have to be very careful as to when I do it, and I have to limit those meetings to as few items as possible, chances as possible.
23:39But keep in mind, Modi cannot keep avoiding doing this.
23:42He cannot skip the UNGA.
23:45He cannot skip the G20, the G7, the East Asia Summit all the time.
23:50At some point, he has to go there to these summits.
23:53And when he does so, he cannot avoid meeting the U.S. president.
23:56So, yes, as much, as little as possible.
24:00But in the end, you have to do this every now and then.
24:04Okay.
24:05I will let that be the last word on this part of the show.
24:07Ambassador Mohan Kumar, Pramit Pal Chaudhary, and Jain Krishna for joining me here on this part of India first.
24:13Many thanks.
24:13We'll all be watching that President Xi and President Trump meeting.
24:18Thank you, everyone.
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