logo
Modi's 'Act East Policy' Requires Him to In Fact 'Act' at Home

Modi's 'Act East Policy' Requires Him to In Fact 'Act' at Home

The Wirea day ago
Modi will find it difficult to commit to a trade deal with a maverick and unpredictable US President without exposing himself to criticism at home.
Anybody who knows anything about the way politics works in this country would have known that US president Donald Trump's 9 July deadline for a US –India free trade agreement was unrealistic. While Union commerce minister Piyush Goyal and his officials have logged many flying miles travelling between New Delhi and Washington DC, it was only inevitable that in the end Mr. Goyal would say that India does not make trade deals based on deadlines. It would do so only on the basis of the national interest.
While a deal may yet be struck at the eleventh hour and Mr. Goyal's tactics may pay off, it will be a politically risky gamble given that the Monsoon Session of Parliament is just two weeks away. Prime Minister Narendra Modi will find it difficult to commit to a trade deal with a maverick and unpredictable US president without exposing himself to criticism at home.
While President Trump has promised a 'win-win' deal, he is now known to interpret every deal as a win for his 'America First' strategy. However balanced a trade deal might be between India and the US, in the competition between Mr. Trump's 'America First' and Mr. Modi's 'India First', the political Opposition in India would have enough to go to town accusing the Modi government of once again 'surrendering' to President Trump's diktat.
Just as the BJP opposed trade deals signed by the Manmohan Singh government, the Congress and Left parties would oppose whatever deal India strikes with the United States, especially in the present context. The context is important. The Modi government is still pushing back on criticism that it agreed to a ceasefire with Pakistan under pressure from President Trump. It can ill afford to be seen as buckling under pressure on the trade front. The stakes are high.
It is not just the criticism from the political Opposition that would worry the Modi government but, even more so, the criticism from within its own support ranks. Even on trade policy, there are as many protectionist hawks within the Sangh Parivar as there are in the Opposition.
Given the difficulties associated with declaring victory on a trade deal with the United States, the Modi government had no option but to place the trade negotiations on the back burner. There can be no movement forward until the Monsoon Session of Parliament is over.
A larger challenge stares India's trade negotiators in the face. Ever since the early 1990s, when India opted to enter into a multilateral trade agreement, the government has zealously defended the country's status as a developing economy. India signed on to the membership of the World Trade Organisation after being assured that, along with other developing economies, it would receive 'special and differential treatment' (SDT). India remains a protectionist economy by Asian standards.
There was a time, during the tenures of the Atal Bihari Vajpayee and the Manmohan Singh governments, when India would declare that the objective of its trade policy was to bring India's tariffs down to 'ASEAN levels'. This objective has never been restated by the Narendra Modi government, which has in fact raised tariff barriers across many product lines over the past decade. India's trade partners have been protesting all along, and in President Donald Trump they have found a strong advocate of their grievances.
There is, therefore, a two-fold problem for Prime Minister Modi with respect to trade and tariff policy. On the one hand, he remains under pressure from within the ranks of the Sangh Parivar to stick to a more protectionist stance. There are many reasons put forward to justify this.
On the other hand, the world outside says that if India is indeed in its 'Amrit Kaal' and is the world's fourth or third largest economy and on its way to becoming 'Viksit Bharat' and is a 'rising power', a 'leading power', and so on and so forth, then why behave like a low-middle-income developing economy seeking 'special and differential' treatment?
The argument for protecting the agrarian economy and the interests of farmers stands on an altogether different foundation. The highly developed economies of Europe and Japan have defended trade protectionism in agriculture on cultural, social and political grounds. The protection of farmers and the farming economy and the cultivation of local varieties of various products is a legitimate policy objective.
India stands on firm ground in rejecting an open-ended policy of trade liberalisation in agriculture. If the United States continues to insist on this front, the Modi government will have no option but to reject and resist all pressure. Neither India nor Japan can agree to trade liberalisation in farm produce without risking a domestic political backlash. The protectionist argument in the case of manufactured goods is, however, much weaker.
A policy option that can be pursued would be for the government to come out with a timetable for trade liberalisation and tariff reduction, setting firm dates for sectors, and gradually allowing the rupee to depreciate to partly compensate for tariff cuts. This would be in tandem with the earlier and oft-repeated promise of bringing Indian tariffs 'down to ASEAN levels'. This is a long-stated goal and is one that should be implemented.
Rather than berate the ASEAN countries and call them the 'B-team' of China, as Mr Goyal has ill-advisedly done, it is time India caught up with ASEAN on the trade and manufacturing fronts. It may be recalled that India's trade and industrial policy liberalisation began in the early 1990s inspired by the experience of ASEAN.
It was after his visit to Malaysia that the then prime minister Vishwanath Pratap Singh tasked an official in the Prime Minister's Office, Montek Singh Ahluwalia, to come up with a roadmap that would enable India to catch up with Malaysia. Mr Ahluwalia's 'M Paper' was the result and formed the basis of Prime Minister P. V. Narasimha Rao's trade and industrial policy. The time has come again for India to 'catch up' with East and Southeast Asia as far as trade and industrial policies are concerned. Mr Modi's 'Act East Policy' requires him to in fact act at home.
This article was originally published in Deccan Chronicle. It has been lightly edited for style.
The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

PM Modi shares 'productive interactions' with world leaders during BRICS Summit
PM Modi shares 'productive interactions' with world leaders during BRICS Summit

Hans India

time21 minutes ago

  • Hans India

PM Modi shares 'productive interactions' with world leaders during BRICS Summit

Brasilia: Prime Minister Narendra Modi on Tuesday shared glimpses of his meeting with a host of world leaders - including the President of Chile, the UN Secretary General and the former President of Brazil - on the sidelines of the BRICS Summit, in Rio de Janeiro, Brazil, which concluded late Monday night, India time. Sharing details about his meeting with the Chilean President Gabriel Boric Font, PM Modi mentioned the growing friendship between both nations. "Delighted to have met President Gabriel Boric Font of Chile during the Rio BRICS Summit. India-Chile friendship is getting stronger and stronger!," PM Modi posted on X. In April, the Chilean President paid a State Visit to India accompanied by a high-level delegation, including ministers, Members of Parliament, senior officials, business associations, media and prominent Chileans involved in the India-Chile cultural connect. During the visit, which commemorated the completion of 76 years of diplomatic relations between the two countries, both leaders had discussed in detail the historic diplomatic ties that were established in 1949, growing trade linkages, people-to-people linkages, cultural ties and also the warm and cordial bilateral relations between both countries. They had expressed desire for further expanding and deepening of the multifaceted relationship between the two countries in all areas of mutual interests. PM Modi also met the United Nations Secretary General Antonio Guterres in Rio de Janeiro on Monday. Taking to X, PM Modi said, "Interacted with Mr. Antonio Guterres, UN Secretary General, on the sidelines of the BRICS Summit in Rio de Janeiro yesterday". India's deepening engagement with the UN is based on its steadfast commitment to multilateralism and dialogue as the key for achieving shared goals and addressing common challenges faced by the global community including those related to peacebuilding and peacekeeping, sustainable development, poverty eradication, environment, climate change, terrorism, disarmament, human rights, health and pandemics, migration, cyber security, space and frontier technologies like Artificial Intelligence, comprehensive reform of the United Nations, including the reform of the Security Council, among others. PM Modi also shared details about his productive conversation with the former President of Brazil, Dilma Rousseff who now heads the New Development Bank (NDB) Rousseff was in Rio de Janeiro to celebrate the progress made by the 'BRICS Bank' and discuss reforms of global financial institutions within the framework of BRICS negotiations. "Productive interaction with Dilma Rousseff, President of the New Development Bank and former President of Brazil," said the Indian Prime Minister. On Tuesday, Prime Minister Modi was given a warm welcome by Brazil President Luiz Inacio Lula da Silva at the Alvorada Palace in Brasilia as he began a State Visit to the country following his participation in the BRICS Summit in Rio de Janeiro. After the ceremonial welcome with military honours and introduction of delegates, both leaders proceeded for a meeting in restricted format that will be followed by delegation-level talks. A signing ceremony on various agreements will be held and followed by leaders' statements to the press. PM Modi will then be honoured with a State Lunch at the Alvorada Palace.

Trump spares India tariff threat missive as he unloads on allies Japan and South Korea
Trump spares India tariff threat missive as he unloads on allies Japan and South Korea

Time of India

time24 minutes ago

  • Time of India

Trump spares India tariff threat missive as he unloads on allies Japan and South Korea

Donald Trump TOI correspondent from Washington: US President Donald Trump on Monday said Washington is close to clinching a trade deal with India even as he lowered the boom on more than a dozen countries including close allies, while sparing New Delhi. Trump sounded optimistic about an agreement with New Delhi, telling reporters, "We are close to making a deal with India," while repeating his incessant claim that he had stopped an all-out war between India and Pakistan by threatening to cut off access to US markets. Neither country has attributed their truce to tariff threats, but the US President obsessively cites that to illustrate the use of trade as an instrument of American power. On Monday, Trump, by most accounts, brought a wrecking ball to global trade with a tirade against much of the world, which in his view has been ripping of the USA. Fourteen countries, rich and poor, big and small, allies and adversaries, were slammed with tariff warnings ranging from 40 percent to 25 percent unless they negotiated bilateral deals before August 1. India faces the same deadline without the almost identical sloppily-written letters Trump sent to 14 countries, although that could change any time given the US President's mercurial approach to strategic ties. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Is it legal? How to get Internet without paying a subscription? Techno Mag Learn More Undo New Delhi has bought time mainly on account of protracted trade talks that have been going on for several months and are said to be in an advanced state. India has pledged to buy loads of American arms, energy, and other produce to whittle down the $ 45 billion trade deficit while at the same time seeking to protect its fragile agriculture sector that provides a livelihood to more than half its population. While the negotiating window is now narrow, there is no sign that India will throw in the towel, even as Trump prepares to throw the kitchen sink, as he did on Monday with long time allies Japan and South Korea, both slammed with around 25 per cent tariffs. In letters riddled with random capitalisation and poor grammar and syntax, Trump told the prime minister of Japan, a US treaty ally, that the trade surplus Tokyo has run up against Washington constituted a "major threat" to US national security. Identical letters citing threat to US national security was sent to leaders of Bosnia & Herzogovina (whose female President Zeljka Cvijanović was addressed as Mr President), Cambodia and Bangladesh, which have small trade surpluses with Washington with exports in the paltry billions. Trump and his team also dialled down expectations of "90 deals in 90 days" that they had talked up at the start of the tariff war the US President initiated. Having negotiated only a framework for three sketchy agreements, Trump indicated most other countries would simply get a letter intimating them of tariff increases if they don't conclude an agreement by August 1. "It's all done," he maintained, even as aides acknowledged that instead of the White House phones "ringing off the hook" as they anticipated, many countries had not even contacted them.

'Over the top sickening': Trump faces MAGA meltdown over Epstein 'list' reversal
'Over the top sickening': Trump faces MAGA meltdown over Epstein 'list' reversal

New Indian Express

time26 minutes ago

  • New Indian Express

'Over the top sickening': Trump faces MAGA meltdown over Epstein 'list' reversal

WASHINGTON: Donald Trump's MAGA base is up in arms after his administration effectively shut down conspiracy theories related to notorious sex offender Jeffrey Epstein that had become an obsession for the US president's diehard supporters. Trump's Justice Department and the FBI said in memo made public Sunday there is no evidence that the disgraced financier kept a "client list" or was blackmailing powerful figures. They also dismissed the claim that Epstein was murdered in jail, confirming his death by suicide, and said they would not be releasing any more information on the probe. It marked the first time Trump's officials had publicly scotched the stories -- pushed by numerous right-wing figures, notably including the FBI's top two officials, before Trump hired them. The backlash was swift and brutal from his "Make America Great Again" movement -- who have long held as an article of faith that "Deep State" elites were protecting Epstein's most powerful associates in the Democratic Party and Hollywood. "Next the DOJ will say 'Actually, Jeffrey Epstein never even existed,'" furious pro-Trump conspiracy theorist Alex Jones tweeted. "This is over the top sickening." Trump has managed to avoid much of the direct blame over the fiasco, with ire instead being directed at FBI director Kash Patel, his deputy Dan Bongino and Attorney General Pam Bondi. Bongino and Patel spent years pushing conspiracy theories around the so-called "Epstein list."

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store