External affairs minister S. Jaishankar is scheduled to meet US secretary of state Mike Pompeo in New Delhi on Wednesday for the first high-level discussions between the two countries after the Narendra Modi government’s re-election. Officials on both sides have played down expectations, speaking of a “get to know" meeting to set the stage for further talks. But behind the warmth on display, there is some unease over recent divergences of perspective on several issues. Even as geostrategic interests converge, relations in the economic sphere have not been so testy since the two countries shed their mutual suspicions of the Cold War era and forged fresh ties, aimed partly at countering the rise of China. And going by US President Donald Trump’s tough approach vis-a-vis China and Europe, it won’t be a surprise if common ground is hard to find on business matters.
Trade appears to be a signature theme of the White House. Indian exporters recently lost preferential access to American markets for several products, and the US seems bent on equal tariffs on both sides for tradable goods. Trump has repeatedly called India a “tariff king", citing a high import duty on Harley-Davidson motorcycles, even though India has recently halved it. A lower tariff could possibly be conceded in this field, since the duty is no major revenue source and domestic manufacturers are unlikely to face a threat from American motorcycles. India could offer easier access to other local markets as well, especially since a more open economy could aid the cause of domestic competitiveness. Easing foreign investment restrictions in a few shielded sectors could make for a better negotiating position. The country could also promise to improve its intellectual property regime, which is in its own interest. On points of policy that have popular backing, however, India may not be in a position to relent: lifting price caps on medical implants, for instance. That could make critical healthcare more expensive and go against Modi’s push for affordable healthcare. The US is also likely to face resistance on India’s draft e-commerce policy and demand that Indian data be stored locally, though both sides need to justify their stance better on these two.
Beyond business, the emphasis will probably be on evolving a common view on the volatile region west of India. While prospects of oil imports from a US-blockaded-Iran appear negligible, Washington may have no objection to India’s assets in Iran’s Chabahar port, a project that would create a trade link with Afghanistan, from which the US wants to withdraw forces. Ensuring that an American withdrawal doesn’t result in instability which terror groups could exploit would be part of New Delhi’s agenda. On defence, an issue that could come up is India’s proposed purchase of S-400 missile defence system from Russia. The deal could attract US sanctions. If the US offers its own alternative, New Delhi could consider it, but Russia’s record of supplies has been consistent and Indian security interests must prevail. Working with a US administration that sees bilateral equations through a transactional lens could be a stiff challenge at the best times. But there may be benefits as well. If Jaishankar manages to shift the relationship’s focus away from near-term trade irritants to long-term strategic interests, both countries could emerge as winners. A gentle reminder of our northern neighbour’s ambitions could set the tone for such an outcome.