India Should Withdraw From Negotiations With US: Says GTRI
- India International Affairs Nato & Alliance North America South Asia
Shreya Naskar- 0
- 5 minutes read
The Global Trade Research Initiative (GTRI) has recommended that India withdraw from ongoing trade negotiations with the United States and adopt a strategic approach similar to that of China and Canada. According to Ajay Srivastava, founder of GTRI, the US has been exerting excessive pressure on India to accept trade terms that primarily benefit American interests. He also highlighted the repeated criticism from US officials, including former President Donald Trump, who has used incorrect data to support his claims against India’s trade policies. Srivastava emphasized that Trump’s public statements about India’s trade policies are misleading and intended to pressure India into compliance. He pointed out that India’s silence in response to these accusations is concerning, as it allows misinformation to spread unchallenged. This strategy of public criticism, he noted, is part of the broader US approach to securing trade concessions from its partners. Several countries, including China and Canada, have taken strong retaliatory steps against US tariffs. For instance, when the Trump administration imposed tariffs, China responded with countermeasures to protect its economic interests. Canada also took firm action against US trade policies that it deemed unfair. Srivastava suggested that India adopt a similar stance rather than attempting to negotiate under duress. On multiple occasions, Trump has claimed that India agreed to reduce tariffs on American imports due to US pressure. However, GTRI has dismissed these claims as inaccurate and manipulative. The report urges India to counter these false narratives with factual data and strong diplomatic engagement.
US Commerce Secretary Howard Lutnick has called for India to open its agriculture market, stating that it cannot remain “off the table” in negotiations. The US is pushing for a broad trade agreement that would include not just tariff reductions but also contentious issues such as government procurement policies, agricultural subsidies, patent laws, and unrestricted data flows. India has consistently resisted these demands due to their potential long-term economic consequences. A GTRI report suggests that entering into a comprehensive trade deal with the US would expose India to unfavourable terms. The report highlighted Trump’s history of disregarding negotiated trade agreements, such as his decision to scrap the US-Mexico-Canada Free Trade Agreement (FTA), which he had finalized in 2019, only to later impose 25% tariffs on Canadian and Mexican imports. To counter these challenges, GTRI recommends that India consider a macro-level reciprocal tariff arrangement covering over 90% of industrial goods under a “Zero-for-Zero” approach. This strategy would eliminate tariffs on select products only if the US reciprocates. However, it cautioned against including agriculture, passenger cars, and other sensitive sectors in such a deal, as these sectors are crucial to India’s economy. The report cited Australia’s automobile industry collapse in the late 1980s as an example of the dangers of excessive tariff reductions. Australia’s domestic car production suffered irreversibly when import tariffs were slashed from 45% to 5%. GTRI warns that India should avoid making similar mistakes, especially given that the auto sector contributes nearly one-third of India’s manufacturing GDP. India’s agricultural sector supports over 700 million people, making it vastly different from the US agricultural industry, which employs fewer than 7 million people. Srivastava stressed that opening even a small segment of India’s agricultural market to US imports could set a dangerous precedent, leading to further pressure for concessions. He argued that this is not merely a trade issue but a matter of national livelihood and food security. He also pointed out that India already maintains relatively low tariffs on major US agricultural exports, which contradicts US claims of excessive trade restrictions.
The US frequently labels India as a “tariff king,” citing high tariffs on specific products such as 150% on wines and alcohol and 100% on automobiles. However, Srivastava countered that the US itself imposes tariffs as high as 350% on certain goods like tobacco. Furthermore, the weighted tariff rate difference between US goods entering India and Indian goods entering the US is only 4.9%, which is far
less significant than the US claims. The report also exposed frequent misrepresentation of trade figures by US officials. For example, Trump claimed that the US trade deficit with India was $100 billion, whereas India’s official data places it under $45 billion. Similarly, the White House fact sheet falsely stated that India imposes a 100% tariff on Harley-Davidson motorcycles when in reality, the tariff was reduced from 50% to 30% in February 2021. Despite repeated provocations from the US, neither the Indian government nor industry associations have effectively countered these misleading statements. Srivastava emphasized that India must take a more assertive stance to protect its economic interests, just as other countries have done in response to US trade policies. India should prioritize long-term economic resilience over short-term appeasement. If the US rejects a “Zero-for-Zero” trade offer and imposes reciprocal tariffs, India should respond only if necessary. Trade data suggests that properly calculated reciprocal tariffs will not significantly impact most of India’s industrial sectors, giving the country room to manoeuvre in trade negotiations. The GTRI’s recommendations underscore the need for India to reassess its trade negotiations with the US and adopt a more strategic approach. Given the Trump administration’s history of leveraging trade talks for unilateral benefits, India must take decisive steps to protect its economic interests. With careful planning and assertive policy-making, India can ensure that its trade relations are balanced, fair, and beneficial to its long-term economic growth.
