India’s phased ban on a variety of Chinese apps appears to be the start of an attempt to extricate itself from the economic stranglehold of its pugnacious neighbour across the Himalayas and look towards a “friend” on the other side of the globe to fill Beijing’s place.
China’s reported transgression in Galwan and across the Line of Actual Control (LAC) besides the violent clash leading to the deaths of Indian troops in June may have forced New Delhi’s hand. But the alternative, which is to open up the Indian market for the United States in a possible free trade-type agreement, would be akin to running away from the proverbial devil towards the deep sea.
The popular adage that “there are no permanent enemies, and permanent friends, only permanent interests” perhaps explains the situation the best. For the US, which since the economic reforms of the early 1990s has had an eye on the Indian market, the situation is tailor-made to consolidate and expand its already sizeable footprint in the country.
Though the volume of trade between New Delhi and Washington has jumped exponentially in the last three decades, there is much more of India’s market waiting to be tapped that leaves the Americans salivating. In 1990, the volume of trade between the two was in the range of $5.5 billion annually. At present, it is around $92.5 billion, according to official figures.
While India is the eighth biggest trading partner of the US, for India, the US is the second biggest – after China. The irony is that the relationship is more often than not at cross-purposes. While India would like the US to back it to the hilt politically, the US would want India to open up completely for its businesses.
But given the historical mistrust between the two countries and the US’s proximity to India’s bitter rival Pakistan, the relationship until 2001 was civil at best, marked by a cautious attempt at a deeper friendship.
Indian policymakers, however, preferred trade with China than with the US, falling for the temptation of cheaper products and the easier access to high-end technology. After all, the US and other big powers themselves were dealing with China and successive Indian governments followed suit.
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New Delhi facilitated an increase in trade with China even at the cost of local industry in various key sectors including pharmaceuticals. The other areas India has come to depend on China include electronics and telecom products. The temptation to buy off the shelf rather than take the trouble of growing indigenous industry has turned out to be seriously short-sighted.
Now that India, to its consternation, realises that China has its own larger geopolitical interests of which trade is just one element, it is stuck in a mess of its own making. And, the alternative — to look up to the United States to fill Chinese shoes? That may be equally counter-productive. As the cliché goes, “there is no free lunch,” particularly where global stakes are concerned.
The US is expectantly waiting to enter into an expansive trade deal with India while appearing to help New Delhi politically by standing with it against Beijing but that will be only up to a point where its own interests are not affected.
The situation at the moment is suitable for the US to swear by India and accommodate it in its larger alliance against China. For, the Trump administration has turned up its hostility against the Xi Jinping government since the COVID-19 pandemic broke out. And the reason for that is that in an election year, US President Donald Trump finds his ratings slipping badly and fears he may not get re-elected. The Republican think-tank calculates that blaming China for COVID-19 and acting against it will hopefully redeem Trump in the eyes of the voter.
Secretary of State Mike Pompeo in recent weeks has publicly taken a pro-India stand and criticised China for the standoff on the border. The India-China tangle on the border, therefore, gives an opportunity for the US to point fingers at China and offer to come to India’s help. Several purposes are served in the process, including an expanded trade tie-up between the two.
Despite economic liberalisation, India has shied away from opening certain areas to US businesses, including the dairy sector.
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For nearly two decades, the US dairy industry has lobbied hard with its government in Washington to pressure India to buy American products But, for well-considered reasons, including questions over the composition of cattle feed in the US, New Delhi has not agreed. Now that India is in the process of offering itself to the US, hopes are up in Washington that finally, it will have access to the vast Indian dairy sector.
Incidentally, the indigenous dairy in India is doing very well and is, in fact, a net exporter. The Indian consumer does not need US dairy products. It could kill off the local industry. As a result, there is tremendous pushback by India’s farmers to head off such a move. But India is caught in a geopolitical jam and the worst may happen.
The US, going by its track record, looks after its interests foremost. India will have a price to pay for all the help it receives from Washington. For example, when the US signed a nuclear deal with India in 2005, among the clauses it forced New Delhi to sign was one which explicitly stated that India should support the US in all its decisions internationally. Owing to this, India had to oppose a long-time friend Iran in various forums including at the International Atomic Energy Agency under pressure from the US.
Or, take the case of Afghanistan. The US has been pushing for the rehabilitation of the Taliban, a group that is close to Pakistan and hostile to India. Washington, until now, has not accommodated India’s concerns and has all but steamrolled its objections in the ongoing reconciliation talks with the Taliban.
The US has also never hesitated to take punitive action if it sees any country acting in contravention to Washington’s diktat. Twice, India has been subject to stifling sanctions following its two nuclear tests – in 1974 and 1998.
Most recently, the very same Trump administration which today is professing great love for India knocked it off from the list of countries that enjoyed preferential trade with the US, as New Delhi did not bend to its missive of reducing tariffs on US goods. The message is clear: if there is one set of problems with China, there is another with the US.
India’s ruling establishment ideally should have learnt from its sobering experience with China and the US to reduce its dependence on imports and back its indigenous industries all the way through. Instead what we see is “Atmanirbharata” in rhetoric, but the exact opposite of it in practice.