FRICTION POINTS
3. Arms Imports
To meet air defence requirements, India contracted to buy five S-400 Triumf (right) missile systems from Russia in 2018, at a cost of $5.4 billion (about Rs 37,398 crore). Delivery is expected to begin from 2020 onwards. The US has objected to the purchase—under its Countering America’s Adversaries through Sanctions Act, countries that engage with Russia’s defence sector are liable to be sanctioned.
4. Iran
In August 2018, the Trump administration imposed a fresh round of sanctions on Iran and extended them to countries that do business with it. This seriously impacted India’s finances and foreign policy—as much as 10 per cent of India’s oil imports come from Iran, and at lower prices than oil from other sources.
At the time, the US allowed exemptions for eight countries (including India), but also asked those countries to begin tapering off their oil imports. This May, it ended those exemptions, jeopardising both Indo-Iranian ties and India’s oil budget.
5. Afghanistan
The Trump administration’s negotiation of a peace deal with the Taliban—including a permanent ceasefire, with the Taliban becoming part of the Afghan government— has raised concerns in India. This deal would both strengthen Pakistan’s diplomatic hand and lead to the end of US security operations in Afghanistan, which could leave India vulnerable to militancy and cross-border attacks. India is also concerned about how such a deal would affect its investments in Afghanistan.
6. Data Localisation
In April 2018, the Reserve Bank of India issued new regulations for digital payment system operators, requiring them to maintain their transaction-record data on servers located in India, and giving them six months to fully implement this policy. Protests from American trade bodies followed soon after, claiming that this would impose severe financial costs (some estimating as much as
50 per cent of expenditure) as firms would have to develop data centres in India, and describing such rules as significant barriers to digital trade. The Modi government has so far refused to withdraw such regulations.
7. Huawei and 5G
On May 12 this year, Trump issued an order imposing export controls on Chinese telecommunications giant Huawei, citing national security concerns. The US warned its trade partners that firms found supplying Huawei with components or technology of American origin would face punitive action. And with Huawei among the bidders for India’s in-development 5G network, the US is also putting pressure on the Modi government to ban it from participating.
8. Lincoln House
In 2015, the US embassy sold the iconic Lincoln House (left), which housed its consulate in Mumbai, to Pune-based industrialist Cyrus Poonawalla for Rs 750 crore. The twoacre property at Breach Candy had been purchased (under a lease agreement with the government) from a former maharaja, in 1957. However, soon after the deal was announced, the defence ministry challenged the sale. The deal has been stalled since then. Currently, both the defence ministry and the state government claim ownership of the land. The US embassy has appealed to the Modi government to intervene, but the matter remains in court.
9. E-commerce
In December 2018, India amended its e-commerce policy, tightening FDI conditions in the online space to further level the playing field for brick-and-mortar retailers. Earlier rules had already imposed restrictions on online marketplaces, such as barring them from offering ‘deep discounts’. The new rules banned e-commerce platforms with foreign investment from selling products that they directly owned or indirectly had control over. This policy directly and adversely impacted American e-commerce giants like Amazon and Walmart, leading to the US government registering a strong protest against it.
10. Harley Davidson
President Donald Trump has long criticised India for its import duties, specifically those on Harley Davidson motorcycles (which earlier faced 100 per cent tariffs). In early 2018, the rate was reduced to 50 per cent, but the Trump administration has demanded that the tariff be done away with altogether. Though Harley Davidson sells a little more than a thousand high-value motorcycles in India each year, the issue has remained a high-visibility punching bag for Trump.