Because the standoff lingers, the query now's: can India as soon as once more sidestep the looming tariff menace via continued engagement, or is India working out of diplomatic runway?
The backdrop to this deadlock started in April when US President Donald Trump threatened to impose a 26% tariff on Indian imports as a part of his administration's aggressive “America First” commerce technique. India initially managed to keep away from quick implementation, because the US marked July 9n because the deadline to offer time to negoatiatons. Nonetheless, the commerce deal was nowhere in sight regardless of stretched talks by July 9 deadline which was then pushed to August 1 in gentle of the continued discussions. Nonetheless, the absence of concrete progress in 5 rounds of talks has positioned the potential commerce deal on precarious floor.
If tariffs are imposed, it might have an effect on billions in Indian exports — significantly textiles, pharma, chemical substances and gems and jewellery — at a time when India is striving to place itself as a key manufacturing various to China.
The dealdock persists
On the coronary heart of the deadlock lies a politically and economically delicate difficulty: US calls for for lowered tariffs and larger entry for its agricultural and dairy merchandise, together with genetically modified crops and dairy. India, for its half, has remained agency in its refusal, citing home sensitivities. The nation's agricultural sector is very fragmented, dominated by small-scale farmers who're susceptible to cost fluctuations and competitors from large-scale US producers.
Moreover, the dairy trade in India has cultural and non secular underpinnings. American dairy merchandise, which are sometimes derived from animals fed with meat, battle with the largely vegetarian dietary norms and non secular sentiments prevalent throughout India. Additionally, full entry to American dairy merchandise will hurt India's personal dairy sector. Politically, yielding floor on this entrance might additionally danger backlash from highly effective home constituencies.
India's negotiation playbook: Delay, dialogue and leverage
India's negotiating technique thus far has revolved round three pillars. First, India has skillfully used continued engagement as a instrument to delay harsh measures. By protecting talks lively, India has created simply sufficient diplomatic cowl to keep away from formal tariffs, as seen when the unique July 9 deadline was prolonged with out penalties.
Second, reasonably than searching for a complete deal, India has favored a fragmented method — agreeing to concessions on different sectors whereas firmly resisting stress on delicate areas like agriculture. Notably, not like different nations, India has not acquired a proper tariff letter from Trump. This ambiguity, whether or not strategic or incidental, has given India extra diplomatic respiratory room to argue that negotiations are nonetheless fluid.
Third, because the US more and more courts India as a strategic accomplice to counterbalance China, India has used its geopolitical weight to affect negotiations. India is aware of that the US, whereas powerful on commerce, additionally sees India as crucial in its Indo-Pacific calculus.
Will India get one other reprieve from Trump?
Given current statements from US Treasury Secretary Scott Bessent, there's nonetheless a faint glimmer of flexibility. Bessent advised CNBC on Monday that the Trump administration was extra involved with the standard of commerce agreements than their timing. Requested if the deadline could possibly be prolonged for nations in talks, he stated it was as much as Trump. Nonetheless, he stated, “We'll see what the President desires to do. However once more, if we by some means boomerang again to the August 1 tariff, I might suppose {that a} greater tariff stage will put extra stress on these nations to come back with higher agreements.”
Bessent emphasised that high quality issues greater than timing, leaving open the chance that Trump might push again the deadline if talks present potential. Nonetheless, he additionally warned that returning to the tariff menace might function leverage to safe higher offers. This twin messaging — flexibility combined with menace — is basic Trump-era brinkmanship. India should now decide whether or not continued engagement can once more defer punitive measures or whether or not the US is ready to lastly name time on negotiations.
As of now, a full deal earlier than August 1 appears unlikely. Nonetheless, India should still reach dodging tariffs, at the very least quickly, by making certain the US perceives the continued dialogue as significant. The incoming American commerce delegation's go to to New Delhi is a crucial indicator that Washington hasn't shut the door totally.
India's technique of participating with out yielding could as soon as once more assist it keep away from the tariff bullet. However this sport of delay has its limits. If the US begins to see India's stance as obstinate reasonably than strategic, the stress might intensify quickly. Nonetheless, with geopolitics on its facet, and with Trump's focus as a lot on optics as outcomes, India would possibly simply navigate previous August 1 with some deft diplomacy. Whether or not that buys sufficient time for an actual breakthrough, or simply postpones the inevitable, stays to be seen.
