Ahead of the visits of Prime Minister Narendra Modi and Commerce and Industry Minister Piyush Goyal to Washington in September, hectic lobbying by major American companies against the protectionist policies of the Indian government is being felt in the US capital.
Multinational giants like Walmart, Amazon, Visa, Mastercard as well as dairying and pharma companies are putting pressure on American President Donald Trump and his ministers to make India open up its markets and ease non-trade barriers against giants like them. While President Trump is mainly focused on a blazing trade war with China, he had said there would be a "major trade deal" with India after his meeting with Modi in Japan in June. Again they have seen each other on the sidelines of the G-7 summit in France now. In between they had a long telephonic talk after the withdrawal of special status of Jammu and Kashmir and the tense face off between India and Pakistan.
But official-level talks on the major irritants between the two countries on trade issues has dragged without a resolution since the meeting with then Commerce Minister Suresh Prabhu and American Trade Representative Robert Lighthizer 14 months ago. While talks on thorny economic issues have not produced a breakthrough, Trump is satisfied with Modi government's response to strategic issues close to his heart. That is why the visit of Goyal, who is also the Minister of Railways, ahead of prime minister's own visit to the United States, has raised prospects of a compromise deal between the two countries.
Initially, American government expects New Delhi to agree for removing the increase in customs duties enforced in the last two years, ask the Reserve Bank to reconsider its direction that financial companies including Visa and MasterCard to store their date in India and also offer talks with big companies of America on the recent e-commerce policy revisions.
Meanwhile, Finance Minister Nirmala Sitharaman's decision to revoke the hike in income tax cess on foreign portfolio investors as well as the promise to review the new proposal to make the non-implementation of corporate social responsibility as a jailable offence, has been welcomed by American companies which have a big presence in Idia. Sitharaman's promise of more relaxation in the coming two weeks is seen as a good gesture to curb restrictions on trade and other economic barriers for American companies, whose interest Trump has been promoting during the last two-and-half years. But in two critical areas - agriculture and pharma- the government is wary of giving major concessions as a flood of American agricultural imports will affect farmers and pharma concessions could make prices of medicines shoot up, affecting everyone.
But Indian diplomats and trade negotiators are also exploiting the strategic cards held by India. External Affairs minister S Jaishankar is coordinating with US ministers including his counterpart Mike Pompeo. Jaishankar is the most experienced member of the Modi government in dealing with United States as he has dealt with Americans as joint secretary, ambassador to Washington, then as foreign secretary, and now as minister. Sitharaman had earlier negotiated with the Obama administration as Minister for Commerce and Industry. Jaishankar has emphasised during his recent meeting with Pompeo on how New Delhi is coordinating with Washington.
As Trump increases the tensions with Iran, the oil companies have brought down the purchase of crude oil to the bare minimum. The increase in defence purchases also favour big American military companies who apply counter pressure in favour of New Delhi to get these deals. If the trade talks succeed there would be a big announcement from Trump. But any deadlock would produce at least an angry storm of criticism of India's protectionism from the tweet-happy president.
