{"id":348402,"date":"2025-10-18T18:07:59","date_gmt":"2025-10-18T12:37:59","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=348402"},"modified":"2025-10-23T12:03:37","modified_gmt":"2025-10-23T06:33:37","slug":"no-trade-deal-is-better-than-an-unfair-one","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/no-trade-deal-is-better-than-an-unfair-one\/","title":{"rendered":"No trade deal is better than an unfair one"},"content":{"rendered":"

Introduction
\n<\/strong><\/h2>\n

In the India\u2013USA trade relationship, negotiations are near conclusion<\/strong>, with a possible leaders\u2019 meeting in Kuala Lumpur<\/strong> (October 26\u201328) to seal terms. US tariffs up to 50% are already hurting Indian exports. The endgame risks are last-minute changes, new demands, and a broad digital \u201cnon-discrimination\u201d clause that can shrink policy space. India should seek real tariff relief without sacrificing farmers, fishers, data and tax tools, or strategic autonomy. If balance is missing, walking away is better than a bad deal<\/strong>. No trade deal is better than an unfair one.<\/strong><\/p>\n

\"No<\/p>\n

Current India\u2013USA Trade Relationship<\/strong><\/h2>\n
    \n
  • Bilateral trade is about $190\u2013191 billion<\/strong>.<\/li>\n
  • The US has been India\u2019s largest trading partner<\/strong> and top export market<\/strong> in recent years.<\/li>\n
  • Both sides aim for $500 billion<\/strong> by 2030.<\/li>\n
  • Shares in India\u2019s trade: <\/strong>The US accounts for ~18% of India\u2019s goods exports<\/strong>, ~6.22% of imports<\/strong>, and ~10.73% of total merchandise trade<\/strong>.<\/li>\n<\/ul>\n

    Negotiating track<\/strong><\/h2>\n

    After a pause, India\u2013USA trade negotiations restarted.<\/strong> An Indian delegation travelled to Washington on October 15\u201317 after minister-level rounds, and a possible leaders\u2019 meeting in Kuala Lumpur<\/strong> (October 26\u201328, ASEAN) was identified as an opportunity to close the deal.<\/p>\n

    Present Challenges in the India\u2013USA trade relationship<\/strong><\/h2>\n
      \n
    1. Steep US tariffs and export slump: US tariffs up to 50%<\/strong> took effect on 27 August<\/strong>. Exports to the US fell ~37.5% (May\u2013Sep)<\/strong> and ~20% in September<\/strong>. Labour-intensive sectors\u2014textiles, gems and jewellery, engineering goods, chemicals<\/strong>\u2014were hit hardest. India\u2019s trade deficit rose to a 13-month high of $32.15 billion<\/strong> in September. The pressure is immediate and uneven.<\/li>\n
    2. Last minute demands:<\/strong>There is a record of last-minute changes<\/strong> after official-level understandings. This creates uncertainty at the final stage of negotiations.<\/li>\n
    3. Dependence risk and supply-chain politics: Tariff weaponisation<\/strong> shows the risk of relying on a few markets<\/strong>. Provisions framed as \u201cresilient supply chains\u201d may target China<\/strong> and affect India\u2019s autonomy<\/strong> to choose trading partners. This adds a geopolitical layer to trade terms.<\/li>\n
    4. Agriculture and dairy sensitivities:<\/strong> Market access demands<\/strong> persist in agriculture and dairy<\/strong>. India\u2019s stance is shaped by food security<\/strong>, small farmer livelihoods<\/strong>, and fisher interests<\/strong>. These sensitivities make convergence difficult.<\/li>\n
    5. Digital economy pressures:<\/strong><\/li>\n<\/ol>\n

      US priorities<\/strong> are to block India\u2019s digital taxes<\/strong>, limit India\u2019s use of its data advantage to build domestic champions<\/strong>, and narrow India\u2019s ability to regulate the digital sector<\/strong>.<\/p>\n

      The specific challenge<\/strong> is the push for a broad \u201cnon-discriminatory treatment\u201d<\/strong> clause for digital services.<\/p>\n

      This would prohibit pro-domestic preferences<\/strong> (for example, requiring government entities to use a homegrown app like Arattai<\/strong>), prevent sharing anonymised government data exclusively with Indian firms<\/strong>, and restrict targeted taxation<\/strong>of activities dominated by US players<\/strong>.<\/p>\n

      It would cut India\u2019s policy tools<\/strong> to support startups and raise revenue, undermining Atmanirbhar<\/strong> goals.<\/p>\n

        \n
      1. Tighter IP and e-commerce rules<\/strong> Stricter: IP standards<\/strong> can affect generics<\/strong> and affordability of medicines<\/strong>. E-commerce and retail rules<\/strong> intersect with competition<\/strong> and consumer protection<\/strong>, creating friction over regulatory space.<\/li>\n
      2. Asymmetric tariff-cut patterns Recent: <\/strong>US arrangements with Japan, EU, Vietnam<\/strong> suggest partners cut MFN tariffs widely<\/strong>, while US cuts go to mid-teens (~15\u201320%)<\/strong>. This pattern of asymmetry<\/strong> reduces room for balanced outcomes.<\/li>\n
      3. Trade talks tied to India\u2019s Russian oil imports:<\/strong> Trade discussions are entangled with expectations on Russian oil<\/strong>. India\u2019s imports still cover about one-third of total oil<\/strong>. A rapid change is operationally difficult<\/strong>, adding energy security<\/strong> stress to the trade track.<\/li>\n
      4. Negotiation uncertainty and rupee volatility: <\/strong>Headlines around negotiations coincide with rupee volatility<\/strong> and RBI smoothing<\/strong>. This macro uncertainty<\/strong> complicates pricing, contracts, and planning for exporters during the negotiation window.<\/li>\n<\/ol>\n

        Way Forward<\/strong><\/h2>\n

        India\u2019s approach<\/strong><\/p>\n

          \n
        1. Insist on a signed, detailed text before any public announcement.<\/strong> Defer new endgame asks<\/strong> to a second phase after inter-ministerial consultation<\/strong>.<\/li>\n
        2. Protect core sectors (Agriculture\/dairy\/fishers):<\/strong> India should keep food security and the livelihoods of farmers and fishers non-negotiable.
          \nOn digital issues, <\/strong>India should reject broad \u201cnon-discrimination\u201d language that would block domestic preference, limit data-based policies, and prevent fair taxation of dominant digital players.<\/li>\n
        3. On intellectual property, <\/strong>India should avoid TRIPS-plus-type commitments<\/strong> that could weaken the generics ecosystem and reduce access to medicines.<\/li>\n
        4. Preserve strategic autonomy: Say no to anti-China or decoupling riders.<\/strong> Keep freedom to choose partners and design supply chains<\/strong>.<\/li>\n
        5. Calibrated market access: <\/strong>India should seek a credible rollback of the US tariffs from 50%<\/strong> toward the mid-teens, with clear timelines. If needed, limited and review-based tariff-rate quotas can be considered,<\/strong> while phasing any Indian industrial tariff changes with safeguards and periodic impact checks.<\/li>\n
        6. Diversify markets and stay ready to pause: <\/strong>India should expand exports to other markets even as it seeks relief in the US market. If the final text tilts against India\u2019s long-term interests, India should pause or walk away. In such a case, no deal is better than an unfair one.<\/strong><\/li>\n<\/ol>\n

          USA\u2019s approach<\/strong><\/h2>\n
            \n
          1. Front-load tariff relief: <\/strong>The United States should provide predictable and early tariff reductions so that Indian exporters can recover momentum and trade flows can stabilise.<\/li>\n
          2. Respect India\u2019s policy space: <\/strong>Avoid blanket digital clauses<\/strong>; accept flexible, best-endeavour<\/strong> wording on data, taxation, and regulation<\/strong>.<\/li>\n
          3. Sensitive agriculture design: <\/strong>Market access in agriculture should be narrow and time-bound so that it does not undercut small farmers or threaten food security. Tariff-rate quotas can be used carefully with clear reviews.<\/li>\n
          4. Keep supply chains open, not coercive: Do not add third-country riders<\/strong>. Let commercial purchases follow viability<\/strong>, not act as preconditions.<\/li>\n<\/ol>\n

            Conclusion<\/strong><\/h2>\n

            India should pursue a narrow, phased, reviewable deal that cuts tariffs now, protects agriculture and fishers, and keeps digital and IP space flexible. It should refuse anti-China riders and purchase linkages, diversify markets, and, if terms are skewed, pause or exit\u2014echoing Chanakya\u2019s caution on unfair treaties<\/strong>: no deal is better than an unfair one.<\/p>\n

            Question for practice:<\/strong><\/p>\n

            Discuss the key challenges in the ongoing India\u2013USA trade negotiations and outline a balanced way forward for both sides.<\/p>\n

            Source<\/strong>: Indian Express<\/p>\n","protected":false},"excerpt":{"rendered":"

            Introduction In the India\u2013USA trade relationship, negotiations are near conclusion, with a possible leaders\u2019 meeting in Kuala Lumpur (October 26\u201328) to seal terms. US tariffs up to 50% are already hurting Indian exports. The endgame risks are last-minute changes, new demands, and a broad digital \u201cnon-discrimination\u201d clause that can shrink policy space. India should seek… Continue reading No trade deal is better than an unfair one<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":348520,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[212,10500,239],"class_list":["post-348402","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-9-pm-daily-articles","tag-gs-paper-2","tag-indian-express","tag-international-relations","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2025\/10\/No-trade-deal-is-better-than-an-unfair-one.png?fit=1280%2C850&ssl=1","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/348402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=348402"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/348402\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/348520"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=348402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=348402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=348402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}