Trump says India not treating US well, but he likes Modi, trade deal later

Trump is scheduled to visit India on February 24 and 25

American President Donald Trump on Wednesday confirmed that the United States and India would not sign any trade deal during his visit to New Delhi and Ahmedabad next week.

Trump once again complained that India did not treat the United States well. He, however, said that he happened to like Prime Minister Narendra Modi a lot. He also said that the US would clinch a very big trade deal with India, not during his visits to Ahmedabad and New Delhi on Monday and Tuesday, but in future.

"Well, we can have a trade deal with India, but I’m really saving the big deal for later on. We’re doing a very big trade deal with India. We’ll have it," Trump told journalists at Joint base Andrews in Maryland, US, early on Wednesday (Indian Standard Time). "I don't know if it’ll be done before the (presidential) election (in the US), but we’ll have a very big deal with India," he added, carefully avoiding committing a timeline for clinching the much-awaited pact.

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The US presidential election will take place on November 3 this year. Trump, who took over as US President in January 2017, is expecting to win a second four-year term in the White House.

A trade deal was expected to be among the big-ticket deliverables of Trump's meeting with PM Modi in New Delhi on Tuesday. But as negotiations between for the deal reached an impasse over the past couple of weeks, all that Prime Minister and US President are likely to do next week is to try to keep it on course.

Though the trade deal is unlikely to be inked during his forthcoming visit to India, Trump appeared to remain excited about the grand welcome PM Modi promised for him and his wife Melania Trump on their arrival in Ahmedabad on Monday.

Trump and his wife, Melania Trump, will first land in Ahmedabad just before noon on Monday. They will also spend about an hour at Taj Mahal in Agra before arriving in New Delhi late on Monday.

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"And (Modi) he told me we’ll have seven million people between the airport and the event," Trump told journalists. "And the stadium, I understand, is sort of semi under construction, but it’s going to be the largest stadium in the world. So it’s going to be very exciting. But he says between the stadium and the airport, we’ll have about seven million people. So it’s going to be very exciting. I hope you all enjoy it,” he added, before asking journalists who among them would be accompanying him on his tour to India.

New Delhi, however, sought to lower his expectation about the size of the crowd, with Foreign Secretary Harsh Vardhan Shringla saying that “thousands of ordinary citizens” as well as “artistes” would showcase performing arts from different States and Union Territories of India along the road when US President and his wife would travel by car from the airport to the stadium at Motera in Ahmedabad.

The state government as well as the ruling Bharatiya Janata Party are likely to bring in people, not only from across Gujarat, but also from other states. The “Overseas Friends of BJP” in US is also likely to mobilize a large number of Indian-Americans, who will join the local people to accord a grand welcome to US President, his wife and of course Prime Minister, who, himself, hails from Gujarat.

A "Namaste Trump" rally will be held at a newly-built stadium in Motera in Ahmedabad in honour of the visiting American President, who was earlier this month acquitted by the US Senate in an impeachment trial. The rally will also give Trump an opportunity to reach out to Indian-Americans – not only the ones likely to be in attendance but also the ones likely to watch it on TVs across the US, eight months before he is about to seek re-election. The rally planned at the newly-built stadium – just about 7.7 kilometers away from the airport – will be much like the "Howdy! Modi" event, which was held at NRG Stadium in Houston in the US on September 22 last year with Trump and Modi appearing before a cheering crowd of nearly 50,000 Indian-Americans.

On their way from the airport to the stadium in Ahmedabad, Trump and his wife will see a panorama of diverse cultural heritage of India, as 28 stages representing the various parts of the country would be set up along the route, in what is being called the India Road Show, Foreign Secretary said. The route will also feature decorations depicting different events in the life of Mahatma Gandhi. “There will be public to greet President Trump outside the Motera stadium. Inside the new stadium, President Trump and Prime Minister Modi would address a full-capacity audience, which would include people from different parts of India and all walks of life, reflecting the diversity of India.”

India-US bilateral trade has been growing at an average rate of 10 percent year-on-year and grew from $100 billion in 2014 to $160 billion in 2019. Two-way investment between India and the US reached $60 billion in 2018. Over 2,000 US companies have a presence in India, while more than 200 Indian companies have invested $18 billion in the US, creating nearly 1 lakh direct jobs, Taranjit Singh Sandhu, New Delhi’s envoy to Washington D.C., said recently.

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But, ever since Trump took over as American President in January 2017, the US has been complaining about the imbalance in its trade with India. Trump in February 2018 expressed his displeasure over high import duty imposed by India on motorcycles like the ones made by Harley-Davidson and other US companies. During his visit to New Delhi in May 2019, American Secretary of Commerce, Wilbur Ross, pointed out that the US was India's largest export market and accounted for about 20 percent of its total export. Yet, he added, India was only the 13th largest export market of the US "due to overly restrictive market access barriers".

New Delhi and Washington D.C. have been negotiating a trade deal for the past several months. The two sides had initially planned to sign it on September 24 last year, when Prime Minister and US President had met in New York on the sideline of the United Nations General Assembly (UNGA) – just days after they had appeared together at the “Howdy! Modi” rally in Houston. But notwithstanding bonhomie between Modi and Trump, Commerce Minister Piyush Goyal and US Trade Representative Robert Lighthizer had failed to narrow differences on several key issues. Speaking to journalists along with PM Modi, President Trump had then said that while both sides would work out a comprehensive trade deal later, a limited-scope pact would be inked soon.

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Though Indian and American officials did make some headway in narrowing differences and moved closer to finalising a deal; the tariffs, fees, and cesses proposed by Finance Minister Nirmala Sitharaman in Union Budget 2020-2021 on agricultural products, medical devices, auto-mobile accessories, electronics and electric vehicles emerged as new irritants.

New Delhi, however, conveyed to Washington D.C. that reduction of duties proposed by Finance Minister in her Budget 2020-21 on several items like fuel oil, petroleum coke, plastic, liquid crystal polymers, platinum and microphone parts opened up opportunities for the US companies to do business in India.

Trump Administration has been prodding the Modi government to remove the price caps on coronary stents, knee implants and other medical devices imported to India from the US. The two sides had by the middle of the last month agreed that the price caps would be replaced with limits on trade margins, particularly on the high-end and premium medical devices imported from the US to India. But the new 5 percent cess on import of medical devices proposed in Union Budget thwarted an agreement on the issue.

New Delhi has been nudging Washington D.C. to restore the Generalized System of Preferences (GSP) trade privileges for India. The special trade privilege was granted to India in 1976 for exporting goods to the US duty free. India's exports to the US under the GSP were worth $5.6 billion in 2017. But Trump Administration withdrew it in May 2019. Over the past few months, Washington D.C. signalled that it might partially restore the privilege for India – albeit with a rider that it would be proportionate to the level of access New Delhi would give the US companies to the market. But with the US on February 10 removing India from its list of "developing countries", the restoration of the GSP benefits now seem unlikely.

India agreed to open up its market for US milk and dairy products, but insisted that the source animals must be fed on vegetarian diets. Since Trump Administration was not ready to provide the guarantee New Delhi asked for, the negotiators could not make progress on this issue too.