Trump Victory Gives Modi Chance to Reset India’s Image With West

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(Bloomberg) — Few leaders in Asia are happier to see Donald Trump return to the White House than Indian Prime Minister Narendra Modi.

Modi became one of the first major leaders to congratulate Trump on his “historic” election victory on Tuesday, posting his message alongside photos of the two men holding hands at a rally of thousands of supporters in Houston five years ago. He quickly followed up with a phone call.

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Trump’s return gives Modi an opportunity to boost India’s image with the United States and its allies, who have recently increased scrutiny of the country’s close ties with Russian President Vladimir Putin and its role in violence against Sikh activists in the United States and Canada. Canadian Prime Minister Justin Trudeau claimed last year that Indian government agents were involved in the killing of dissidents living abroad, and the cases are now making their way through US and Canadian courts.

The officials in New Delhi, who requested anonymity, expect the new Trump administration to be less stringent in demanding that the Indian government be held accountable for its alleged involvement in extrajudicial killings in Canada and the United States. The Biden administration has been pressuring India to investigate and prosecute officials allegedly involved. India officially denied organizing any assassinations.

Analysts and officials believe that the United States under Trump will continue its years-long effort to cultivate India as a strategic partner against a more assertive Beijing, an effort that has earned India significant new investment from American companies such as Apple.

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“Trump will continue to view China as the greatest geopolitical challenge, and in this equation, India’s long-term value as a strategic partner of the United States will be undisputed,” said Irfan Nooruddin, professor of Indian politics at Georgetown University. “While military cooperation with Trump will continue, the real question is whether good relations will extend to the benefit of the broader Indian economy and trade.”

Trade wars

Officials in New Delhi warn that although overall relations may improve, India may see new trade problems under Trump and a reduction in cooperation in previously key areas such as technology sharing and defence. Trump has called Modi “the most beautiful human being,” while also being quick to criticize India for being the “biggest shipper” of the tariffs.

The United States is now India’s largest trading partner, with bilateral trade reaching $119.7 billion in the last fiscal year, an increase of more than a third in five years. The US trade deficit with India has widened steadily over the years as imports are diverted away from China. Trump’s plan to impose 20% import tariffs on all countries and 60% duties on goods coming from China could cost India 0.1% of its GDP by 2028, according to Bloomberg Economics estimates.

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Hefty US tariffs on Chinese goods may help drive more trade to countries like India, but there could be negative spillover effects as well. Officials in New Delhi said they would watch closely if China started flooding India with cheap goods. If that happens, officials do not rule out imposing higher duties on Chinese goods in response.

New Delhi’s other interest is cooperation in the field of defense and vital technologies. The two countries agreed in August to promote joint production projects for a range of high-tech equipment, including jet engines, unmanned platforms, munitions and ground mobility systems. The two sides are also working on a cooperation initiative on “critical and emerging technologies” that Modi and Biden announced last year.

Both efforts may face new challenges given Trump’s protectionist tendencies.

“President Trump may not be open to sharing technology or allowing jobs to move from the US to India,” said Meera Shankar, a former Indian envoy to the US.

Russian relations

Trump’s return makes it easier for India to continue balancing its close relations with Russia, which supplies India with cheap oil and military equipment, while keeping US relations on the right track. Modi has been under pressure from Ukraine and the United States over his relations with Putin.

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“India will find it easier to manage its long-term relationship with Russia if President Trump negotiates a settlement to end the Ukrainian war,” Shankar said.

Indo-US relations have certainly strengthened under Republican and Democratic administrations, and Indian diplomats believe that Trump’s tough stance on China will ensure continued engagement with India.

He was president before. “We all know what policies he stands for,” India’s chief economic adviser, Anantha Nageswaran, told CNBC TV18. “I don’t see much discontinuity or disintegration from the Indian point of view.”

Trump was not always easy to deal with for India during his first term. In 2019, it withdrew India’s designation as a developing country, a status that allowed the South Asian nation to export thousands of products duty-free to the United States. India responded by imposing higher tariffs on many products coming from the United States.

In a second term, he could push hard for tax breaks and lower import duties for US companies such as Tesla and Harley-Davidson, Indian officials said. He has previously cited India’s high import tariffs as an impediment to Harley-Davidson’s expansion.

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Another concern for India: Trump’s push to tighten immigration restrictions. Indians are the biggest beneficiaries of H-1B visas to the US, which are widely issued to workers in the technology sector. Trump issued restrictions on H-1B visas during his first term, and is widely expected to tighten immigration to the United States during his second term.

“There are two issues in particular that I think he will focus on that could make life difficult for Indians,” said Milan Vaishnav, director of the South Asia Program at the Carnegie Endowment for International Peace. The first is the whole issue of trade, tariffs and market access. The second is immigration.”

-With assistance from Preeti Soni and Santosh Kumar.

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