India needs to offer Trump a headline deal: USISF head Mukesh Aghi

Hindustan Times

3 days ago

India should focus on giving President Trump an eye-catching headline rather than getting stuck in details to seal a trade deal with Washington, says Mukesh Aghi, who heads the US-India Strategic Partnership Forum. In an interview with HT, Aghi said the risk of the trade deal falling through is high as Trump wants a bigger agreement. Edited excerpts: Mukesh Aghi, who heads the US-India Strategic Partnership Forum, said the risk of the trade deal falling through is high as Trump wants a bigger agreement (HT)
The India-US trade deal seems to be stuck at the moment. Why is that?
India was the first country to start negotiations on the trade deal, compared to other countries, and we made a lot of progress. Last week, commerce secretary Howard Lutnick and US trade representative Jameson Greer gave the proposal to the President. However, the President wanted a bigger deal. When you say a bigger deal, this was a phase one deal. It does not address the issues of agriculture and dairy, which is a red line for India. That's where it is stuck at the moment. I think the challenge is that we are so entrenched in the grain of the deal rather than trying to give a big picture headline to the President since he loves headlines. My recommendation would be that India should tell President Trump that this deal is a 'trillion dollar deal'. We will focus on taking trade between the two countries from $200 billion to $1 trillion. A trillion dollars makes headlines. Then look at Indian companies making investments in the US. Last year we had investments worth almost $12-15 billion. If you just look at the Birla group, they are putting in a $15 billion investment. So we can tell the president that in the next five years, Indian companies will invest half a trillion dollars. We need to give a headline platform, otherwise the deal will get stuck.
How real is the risk of the deal falling through?
The risk of a deal not moving forward is high. The risk of India having a 26% tariff has implications. It's not just about Indian exports. It's about US companies looking at India for de-risking their supply chains, and if they have to put 26% more tariff, they'll go somewhere else. But if it's 15%, then India becomes more attractive. So the risk factor is not about exports. This risk factor is creating more jobs, getting other companies to come in and invest more in the country. To me, that's a bigger risk.
There is concern in Delhi about President Trump. The fear is that India can sign a deal but the President could then threaten tariffs on BRICS nations and the new Russia sanctions bill is also on the table. Can President Trump be trusted to stick to a deal?
If you see Trump's record, he reneged on deals with Mexico, South Korea and Japan. So there are no guarantees, but you have to understand the world has changed. It's a world basically driven by the brute muscle diplomacy of the United States and you can't fight that. You can figure out ways to live through that. India has to learn from that perspective.
President Trump has also spoken of placing tariffs on pharma exports, including on Indian firms. Your view?
This is true, but you have to understand one thing. After the cuts to government programmes Medicare and Medicaid, cheap prescription drugs are very critical for Trump's base. Today, 40% of prescription drugs come from India, and if you take that cost up by putting tariffs, that's going to hurt Trump's base. So I don't think the objective is to target that segment of the drug market. They're more focused on the devices coming from Europe.
What do you make of the recent volatility in the India-US relationship?
The relationship is as good as it was. What is happening is we are reacting to some of the statements being made by the President. We need to have a thick skin. We can't be thin-skinned and react to it. He makes the same statements for his closest allies including Japan, France, Canada and India should not react to it. The relationship is not just with the White House, it's also the larger administration. It's with the Congress, it's with the business community, it's with the Indian diaspora. It's a relationship based on technology. So the relationship is much broader, we should not react if a president makes a statement and his statement changes on the hour.
Some believe India should wait out President Trump. His party is expected to lose its majority in the House of Representatives next year and his powers will be more curtailed. Your view?
That's the wrong strategy. We need to be proactive. When the President said he brokered the ceasefire between Pakistan and India, instead of being defensive, we should say we will nominate him for two Nobel Prizes. You have to understand that the whole game has changed, and you have to change your approach. Trump has made statements about brokering the ceasefire between India and Pakistan. I believe he said that statement 25 times, and we keep defending this 25 times. We need to move on. Waiting out is not the answer, because you have US companies thinking of making critical decisions on de-risking the supply chain from China and if India has a lower tariff and a deal with the US, then they will look at India because neighbouring countries and competitors could have higher tariffs.