India and US Close to Trade Deal

When President Donald Trump assumed office for the second time in the United States, Prime Minister Narendra Modi was among the first to welcome him. Trump even then called Modi his old friend. As soon as Trump came to power, there was talk that he would launch a tariff war in the name of protecting American interests during his tenure. India had expressed its desire for a free trade agreement with the United States at that time. Over time, meetings were held for this, but the agreement kept getting postponed every time, even though both countries continued to express their desire for an agreement. Meanwhile, the US signed trade agreements with many countries, among which China was also a major one. But the agreement with India has not yet been reached. Meanwhile, the US repeatedly threatened to impose higher tariffs and penalties on India because India continued to purchase oil and gas from Russia. Russia also granted concessions to India in response. It was estimated that India had been purchasing 58 percent of its crude oil needs from Russia, but this percentage has now decreased. Despite this, the US imposed a 25 percent tariff penalty on India for purchasing Russian oil. Later, it also announced that a 100 percent tariff would be imposed due to India’s insistence on continuing to purchase oil and gas from Russia. The same tariff rate was announced for China, but recently, in its desire to obtain rare earth minerals from China, the US reached an agreement with China and avoided the 100 percent tariff. This threat still hangs like a sword of Damocles over India’s head. But as times change, so does business. Recently, news broke that the United States had reached an agreement with Russia to purchase large quantities of diesel. Understanding the situation became even more difficult given the threat of heavy fines against India, while on the other hand, the agreement to purchase diesel from Russia itself. US Secretary of State Marco Rubio explained that every country faces complex factors that must be considered. For some, obtaining energy from alternative sources becomes difficult. Recognizing this, the US has also granted India a temporary waiver of penalties on Russian oil. On Tuesday, Marco Rubio met with Indian Foreign Minister S. Jaishankar in Mumbai, discussing energy, trade, defense, and important bilateral cooperation. Rubio stated clearly that, given the impact on global supply, global prices, and other countries over the next few months, we have had to ease the sanctions. Now, we are trying to finalize a trade agreement with India. We are very close to it. It’s true that the US is concerned about the Russia-Ukraine war, but we can’t completely disrupt another country’s economy because of one issue. Therefore, by entering into this agreement, we are attempting a complex balancing act with India. Is it appropriate to enter into a trade agreement with India, first in light of US tariff threats and now, in light of changing times, to seek an opportunity? In our view, a trade agreement between India and the US is a must, but it should be ensured that the interests of Indian farmers are not harmed and that India itself directs Indian commercial policies, rather than attempting to dictate them from Washington or New York