Amidst the ongoing global trade war, the Trump administration’s recent outreach to New Delhi reflects an effort to establish common ground for a united stance against China.
The Charm Offensive
In his latest visit to India, the US Vice-President JD Vance made some unequivocal remarks about the enduing nature of Washington’s ties with New Delhi as one of the most defining alliances in the contemporary world. Hyperbole aside, Vance still said that if the US and India “fail to work together successfully, the 21st Century could be a very dark time for all of humanity.” Needless to say, the ‘dark side’ lies next to India, i.e., China, from Washington’s perspective. Vance also said in his Jaipur speech that the US is seeking to sell more energy and defence equipment to Delhi. He was probably referring to Trump’s earlier offer to sell F-35 jets to India to counter-balance China’s growing military strength in South Asia and beyond. Therefore, Vance argued, “If India and the United States work together successfully, we’re going to see a 21st century that is prosperous and peaceful”.
There is no denying that Vance’s many remarks are more about the geopolitics of countering China and less about the actual state of India-US ties, including India’s ties with Moscow. Of course, the elephant in the room is the tariffs that the Trump administration imposed on India alongside the rest of the world. Vance did speak about the ‘deal’ that New Delhi and Washington are trying to strike, but his visit also made clear the shaky grounds it is being built on. Part of Vance’s mission was to charm India’s Prime Minister Modi. “I think he is a special person,” Vance said. “In the past, Washington approached Prime Minister Modi with an attitude of prejudice or even one of condescension. And, as I told Prime Minister Modi last night, he’s got approval ratings that would make me jealous.” Vance made these remarks after a dinner party hosted by Modi celebrating Vance’s son’s birthday. While candid and frank, the event was also a perfect way to mask and render invisible the many complications that underlie India’s regional geopolitics, including its ties with China. The nature of India’s economic ties with China is such that Washington, even if it wanted to, cannot force New Delhi to “de-couple” without imposing indirect costs on India. Trump’s tariffs, in fact, have made the possibility of any significant “de-coupling” even more difficult, primarily because of the complications they have introduced in the China-India equation to the disadvantage of India.
The India-US-China Triangle of Tariffs
Indian officials recently confirmed that India’s GDP, due to US tariffs, could reduce by 0.2 to 0.5%. Even though an Indian official said that this was not a huge impact, it still was big enough a hit to force New Delhi to approach the US for talks. While India and the US are yet to sign a deal, Washington’s aggressive push to make India its frontline ally against China hardly dovetails in any reasonable way with India’s trade ties with its neighbor. While there is a significant trade imbalance between China and India, the US currently accepts 35% value addition in India as sufficient for a “rule of origin” certificate, allowing India to import Chinese components, assemble them and export finished products to America. Let’s not forget that the US is India’s largest export market. Therefore, if Washington pushes India into a more anti-China posture and uses this scenario to strike a trade bargain as well, it will quite certainly expose India to Chinese retaliation. Beijing’s response could significantly choke India’s own production lines, impact its exports not only to the US but overall, and dent its ability in the long run to compete with China strategically as well.
India now has a US$100 billion trade deficit with China. Beijing’s decision to impose tariff or non-tariff barriers, such as rigorous quality inspection, could further increase this trade deficit. With China constituting over a third of India’s foreign trade, these measures could precipitate a severe economic contraction, hobbling India’s industrial ambitions and global market competitiveness.
In the ongoing global race for sharping national economies around rare earth minerals, India’s reliance on China makes it even more vulnerable. New Delhi sources 60% of its rare earth elements and 40% of its critical raw materials from China. While India does have its own deposits of rare and raw materials, Beijing controls 87% of global rare earth elements processing.
Further complicating India’s chances of successfully placing itself as Washingtons’ front-line ally is the fact that New Delhi has stakes in several regional setups, such as the SCO and BRICS, dominated by China. An alliance with Washington could also push Beijing to strategically isolate India elsewhere.
Therefore, whether Vance’s charm offensive on PM Modi will work in the ways intended or not is a huge question. A lot of this ultimately depends on India’s will to defray the cost of “de-coupling” from China. India’s potential “de-coupling” from China could take years. Will India be able to survive this period without loosing its strategic and economic goals? New Delhi has also to consider the fact that the new administration in the US after Trump may have a very different vision, i.e., one that may not be willing to place India at the centre of its China policy, or it may have an altogether different China policy.
Salman Rafi Sheikh, research analyst of International Relations and Pakistan’s foreign and domestic affairs.
