India’s Place in an Uncertain Trump Presidency

The Wire, February 12, 2017

By Pradeep S Mehta and Kyle Cote

While Indo-US relations will likely remain the same, an indirect in terms of trade, climate change and security should be watched for.

With Donald Trump inaugurated as president of the US, the world is contemplating how international relations will play out with the global leader, including for those watching in India. Questions arise on whether to take Trump’s nationalist rhetoric seriously or to believe his businessman persona will make him a practical president to deal with, or that the judicial system in the US will not allow him to implement some of his calls, such as the restrictions on the temporary movement of IT workers.

Taking into account such uncertainty and what we’ve seen of Trump and his team thus far, the path forward for India in key geo-economic and geopolitical areas could be more challenging than ever. However, from this India has an opportunity to expand and deepen its trade relations in new markets, uplift its domestic capacity, reduce the harmful effects of climate change and become a leading actor in the Asia-Pacific.

Regardless of shake-ups in the global order, India’s true focus must remain in designing and implementing a clear, internally-based strategy through a transparent and inclusive process to promote open and fair trade and cooperation bilaterally, regionally and multilaterally.

Participation and input from civil society, the business community and other external experts will be critical.
For those Indian policy-makers, negotiators, diplomats and businesses wondering what to do with such uncertainty and destructive anti-globalisation likely to come from the US, let’s be clear that Trump must be taken seriously for his ‘transactionalist’ and zero-sum worldview that will guide his ‘America First’ administration.

That administration has been filled with business characters and political insiders who, while chosen for their loyalty to the president, will undoubtedly vie for Trump’s attention, especially on the top priority of trade. This could be like what we saw in the campaign where Trump played his staff against each other, creating rivalries.

Although generally connected in their criticism of China and, as Mr Trump puts it, the “raw deal” given to the US, the hierarchy is unclear between nominated commerce secretary Wilbur Ross and others like Peter Navarro, Robert Lighthizer, Jason Greenblatt and Steven Mnuchin, all with their foot in the door on international trade. India will have to wait and see how the dynamics of the administration evolves.

From overall observations, we’d expect relations between the US and India to remain constant for some time; hopefully even continue the positive movement made in the past two presidencies. A Trump presidency will have less of a direct impact on India, barring a few specific areas like movement of Indian professionals to the US or impediments to FDI to India.

Although no less important, more impact may be indirect in terms of trade, climate change and security, that Indian decision-makers should be closely monitoring with input from external experts. Importantly, the relationship may be dictated chiefly by business considerations and less of shared values or cultural connections; something to consider when trying to maintain forward moving Indo-US relations.

With regard to trade as a tool for its economic and development goals, India will have to broaden its gaze to weather this storm of uncertainty. The anti-globalisation and nationalist fervour from so-called ‘losers’ of globalisation are so palpable that a country like India that has gained much from its open trade stance will have to make even greater effort to listen to its people at all levels and particularly from the most vulnerable to open trade. This will also require clear and targeted domestic provisions for retraining, relocation and unemployment support.

Trump’s rhetoric on immigration turned into action swiftly through executive orders. His ‘America First’ stance focused on American workers is expected to restrict temporary work visas that could severely impact India’s employment and remittances as well as hamper diplomatic ties between the two nations. Strengthening that threat further is Trump’s attorney general pick, Senator Jeff Sessions, a long-time critic of such visas. India and its impacted industries must unequivocally show the administration that its skilled and unskilled domestic labour, the kinds of jobs Trump has called to return home, will not fill the gap if Indian professionals are blocked out of the US labour market.

As a potential conflict between the US and China heightens, India will have to play the balancing act, not unlike its recent US and Russian relations. India should not expect that the potential rise in tension between the US and China will draw Washington closer to Delhi, considering Trump’s zero-sum worldview. Likewise, India shouldn’t become complacent in thinking that its friendship will blossom due to Trump’s global tirades against what he sees as his enemies. Rather, India must cultivate both countries’ relationships based on its own principles and strategic vision.

Considering the advancements and accessibility of renewable technology, India has the opportunity to be a driver in the industry to address the serious challenges of climate change. India must plan immediately to acquire sources of funding and investment, considering the US may renege on its financial commitment, less it actually removes itself from the Paris Agreement. To start gaining a foothold on becoming a leader in renewable technology, India can first promote its intrinsic aggregator industry to develop solar technology. Such groups of aggregators, with established supply links in compatible sectors such as electronics, can procure components domestically and internationally more efficiently than multinational brick and mortar solar companies. In the long-run, India must invest in renewable company start-ups.

As regional leadership gaps arise with potential US withdrawal, whether in economic integration or climate change, India should place itself as a safe alternative to China that will be a non-intrusive partner in the Asia-Pacific, with a history of understanding and promoting the needs of developing countries in the region and beyond. Countries that leaned more toward the US and less toward China, like Vietnam, South Korea and Japan, can look to India as a strong partner in the region on trade and security cooperation; both bilaterally and in regional arrangements.

To whatever extent a Trump presidency creates a neo-protectionist ‘America First’ regime and whether that challenges the Indo-US relations or not, India’s core focus must remain on promoting mutually beneficial trade arrangements and cooperation bilaterally, regionally and multilaterally.

The likely swell in unpredictability out of the US should not invite reactionary approaches from the Indian government, businesses or citizenry. If India is guided by grounded principles based in its development and economic needs, it surely can weather any storm of uncertainty that may come its way.

The authors work for CUTS International

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