It was almost unexpected of President Trump to come out and talk about India’s recent act of Purchase of oil from Russia and the defense armaments. It didn’t just end there, but also applied a 25% tariff on India, which followed without any trade deal. The current state of the whole scenario is quite tense now. This seemed quite ironic because, back in February, when President Trump hosted Indian Prime Minister Narendra Modi, he had stated him as his close friend or ally, and a new trade deal was expected. However, to date, we see no such deal about to happen. Now, the parliament of India and the mainstream can be seen as a hub of anti-Americanism policies and criticism.
Structural Barriers in US-India Relations
Even after 75 years of independence, both countries, although they consider themselves the leading democracies of the world, cannot become true allies of shared interests. The reason for that could be that India, in its early stages, had made sure not to grapple it in the game of allies and taking sides. During the Cold War between the USSR and the US, the two ideological poles, India like any other post-colonial developing country, took the middle path. Or maybe they wanted to play both sides. They had their fair share of relationships with the US while having a good financial and military support from the USSR, when India applied a socialist approach in its economic policies.
Moving further, President Obama also tried to persuade India by accepting and understanding its need to be called strategic autonomy. The alliance between the USA and India could prove to be very beneficial for the opposition against China from a military and geopolitical point of view. But their economies said otherwise and never synced. India was not ready to become an enough state for the US as a manufacturing partner. India had never plugged into the global value chains. Its political economy was never welcoming the foreign competition to its domestic market. India has been very hard to deal with, and just say no to everything.
India’s Strategic Dilemma in South Asia
There has been a great break between the US and India, but they have a lot of edge on the American side with the rare earth magnet. While from Russia, India is still an importer of 35% defense equipment from Russia. Russia has been an apple of Pakistan’s eye because of the new steel mills rebuilding plan, or maybe an addition of an energy cooperation as well. With that said, it seems that Russia is balancing its status in South Asia.
However, America has also called for a 19% tariff on Pakistan and another deal of oil exploration deal, along with a crypto offer. The shift in Indian policy is quite predictable. But India does not seem to have a lot of cards to play because the situation calls for focus on one matter, and that is economic. Whether Trump will fall back on two things, one of which is keeping a cooling stance on Russian oil, and the other is to persuade the US into giving India a longer extension, and give them a chance to strike a deal.
India’s Protectionism vs. U.S. Market Demands
For India, it comes with a lot of risk because there is real money at stake. After all, if India is not able to get the sanctioned Russian oil cheap in the world market which then the major beneficiary of that being Adani, which owns the refineries. There is both a corny capitalist domestic political economy, but it is also a fact that India is a country growing up to 1.4 billion people, whose energy needs are only growing and growing. This is a real energy security concern and Russia’s cheap oil has enabled India to look forward and predict last 4 to 5 years by keeping the source of inflation down because they were able to get their hands on cheaper oil.
The major domestic politics change is going to be yet seen because it hard for the country to kick back on their interest just because America has been giving them a hard time. India’s lack of relative openness to the global market and economists are arguing for a while that India need to continue way too much protectionism. However, it is countered with Indian Prime Miniter’s notion of self-reliance. But America wants less protection on two sectors one is agriculture and the other is broader consumer market.
The good economist calls for a better long run plan but he politician or the opposition in India don’t get to play 50 years game or that they don’t want to lose elections for 50 years. If India staggered elections means there is always an accountability. In many ways New Delhi is running into partially or skilled speaking personnel problem as well which makes it very difficult to find a new course forward.
Conclusion
US-India relationship stuck between strategic potential, economic friction with tariffs and protectionism and geopolitical balancing blocking real progress. India’s pursuit of self reliance clashes with America’s market opening demands while energy security keeps Russia in play. Keeping the true alliance more of a talking point than a reality.