Rama Krishna Sangem
Now America plus many. Prime Minister Narendra Modis government aims to go for the US plus many model as far as the global trade is concerned. This means, India will not depend only on America for everything – right from our exports to imports to higher education to good jobs to immigration to foreign remittances. In one word, we are totally linked with the US economy and its policies.
That is the reason why our rupee goes up or down whenever there is talk of Federal Reserve, like our RBI, hiking or cutting interest rates. Any slight changes in the US fiscal policies affect our stock markets and bullion rates. Our youth in general depend on the US education and wait eternally for H1B visas or the green cards.
Ever since President Trump assumed office at White House, the uncertainties have gone up. Indian government and most of the educated youth will have to wait every day what decisions Trump will take and how they will impact us. Trump’s daily talk of tariff threats and changing deadlines is leaving us with no time to gasp.
Modi wants to change this. July 24’s Comprehensive Economic and Trade Agreement or FTA – free trade agreement – with the UK is a step in the direction of gradually diversifying India’s trade from the US. Till now we have FTAs (though they are called with different names with different countries) with 16 countries, including the UK.
Soon, we are going to sign a deal with the EU which includes 27 member countries. Of course, a mini and big deal with the US too. We are yet to decide on how to deal with China which is another major trade partner of us. There are 200 countries in the world which have active trade activity and India can easily sign deals with not less than 100 of them.
The reason is simple
Trump wants to bridge the trade deficit with India which stands at around 47 billion US dollars as of now. Our exports to America are at 87 billion US dollars while imports are at 41 billion US dollars. So, we enjoy a trade surplus of 47 billion dollars with the US. Trump wants wipe out this margin to us and get some surplus, if possible.
This will be a blow to India. As of now, India’s total exports to the world countries are at around 830 billion dollars. Our total imports are at around 920 billion dollars. So, we are left with a total trade deficit of around 90 billion dollars. If Trump takes out trade surplus with the US, our deficit will further go up.
We don’t want this to happen. We urgently need to enter into trade deals with as many major trading countries as possible. In normal course, this would not have been required as there is a WTO (World Trade Organization) which governs the overall trade among the countries. But, Trump is disregarding the WTO rules. So, now India is trying to do business with countries other than the US to secure trade surplus.
It appears India can easily enter trade deals with at least 25-30 more countries in the coming months/years.
