India should keep cool, keep calm, and carry on

New Delhi should ignore Donald Trump’s rhetoric and stay the course in trade negotiations with Washington

There is no trade war today between India and the US. On the other hand, there is not exactly peace. In early October, President Donald Trump called India “the tariff king”, bringing to the fore bilateral trade frictions that have been simmering beneath the surface for a while. “They’ve already called us to make a deal,” he said. “We didn’t even call them. They called us to make a deal, which is, like, shocking to people.” The point Trump was making —primarily for the consumption of the US domestic audience — is that he is “winning” in the tussle in trade relations with India. Winning in the public spotlight matters more than anything else to this president.

Recognising this, India should ignore the president’s rhetoric. It should continue to stay the course in its current approach to trade negotiations with the US. To date, New Delhi has been patient with Trump . It understands that the prevailing weltanschauung in Washington is more protectionist than it has been for decades. India recognises that, in dealing with Trump, one is more likely to succeed by adopting the tactics of Mexico and Canada, which have already renegotiated the North American Free Trade Agreement, rather than that of China.

This perspective is a solid one because of the economics involved. That’s so because the opportunity and need for India is to maintain the growth trajectory of bilateral trade with the US, which has been consistently growing at an impressive rate since 1991.The country’s bilateral trade in goods with the US in that year stood at $5.2 billion with exports of nearly $3.2 billion and imports amounting to roughly $2 billion. Last year, the India-US bilateral trade volume was more than $74 billion. Adjusting for inflation, $5.2 billion in 1991 is $9.2 billion in today’s dollars. This means that the bilateral trade has grown eightfold in this time period.

There are several reasons that the trade between the two nations has registered such substantial growth over the past quarter century. The liberalisation of the Indian economy and its subsequent expansion is foremost among them. An improvement in bilateral relations in the post-Cold War era is another factor. A big reason, in addition, is the fact that neither nation has allowed their differences to come in the way of trade. There have been frictions all along, as is evident from the number of complaints each country has filed against the other through the years with the World Trade Organization over unfair trade practices and protectionism. Over the decades, the US has complained about India’s patent laws, which, according to Washington, cost American companies billions of dollars. In recent years, India has protested the tightening of H-1B visa rules, specifically targeting Indian companies, by successive US administrations.

There are numerous examples of other points of disagreement. Despite these differences, the governmental leadership and business communities in both countries have been