US-India trade deal hits snag as talks fizzle

AMERICAN dairy farmers, distillers and drugmakers have been eager to break into India, the world’s seventh-biggest economy but a tough-to-penetrate colossus of 1.3 billion people.

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Talks between the Trump administration and New Delhi, intended to forge at least a modest deal in time for President Donald Trump’s visit that begins this week, appear to have fizzled.

Barring some last-minute dramatics, a US-India trade pact is months away, if not longer.

“I’m really saving the big deal for later on,” Mr Trump said last week. “I don’t know if it will be done before the election, but we’ll have a very big deal with India.”

The US presidential is on November 3.

For now, the failure to reach a deal, despite the pressure of an approaching summit, may reflect not so much the differences between Mr Trump and Indian Prime Minister Narendra Modi as the similarities. Both are fierce nationalists who favour protecting their own producers over opening their markets to foreign competition.

“You’ve got two leaders who are looking at trade very much as a zero-sum game,” said Richard Rossow, a specialist in US-India relations at the Center for Strategic and International Studies.

Long notorious for high trade barriers and a cumbersome bureaucracy, India had for the past two decades been slowly reforming and opening its economy. Under Mr Modi, that trend has reversed.

Regarded as a business reformer when he took office in 2014, Modi has increasingly turned protectionist, matching Mr Trump’s “America First” example with “India First” policies of his own.

“US behaviour on the trade front has pushed India in the opposite direction of where we could like it to go,” said Edward Alden, senior fellow at the Council on Foreign Relations.

One of Mr Trump’s first acts was to withdraw from a 12country Asia-Pacific free trade pact negotiated by the Obama administration. Similarly, Mr Modi last year abandoned another Pacific Rim trade agreement, worried that India would be overwhelmed by Chinese imports.

Mr Modi may be even more sensitive about exposing Indian companies to foreign competition because his country is in an economic slump. like they’ll have to election