The India-US Relationship Right Now? It’s Complicated

The two democracies have never been closer, it’s true – but Trump’s ‘America first’ kick is creating new irritants.

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Yes, the world’s two largest democracies have never been so close, their interests so aligned (thanks, China)... but US President’s insistence on the new ‘America first’ outlook is fomenting brand new irritants in the relationship.

For one, his latest tweet about Hafiz Saeed’s arrest in Pakistan:

When much of the international community accepts that Pakistan regularly unleashes terrorists against India, calling Saeed a ‘so-called’ mastermind sends the wrong signal to India. That, and the fact that Saeed has even stood for elections in Pakistan, meaning that he didn’t need to be ‘found’ as such to be arrested... he was moving about freely. All in all, a tweet likely to irritate further.

But let’s get to policies.

H1B Hiccup

The whole nationalistic kick might help Trump and Modi bond on a personal level, but at a policy level, it’s creating disturbances. The first casualty were the H1B visas.

Approximately 70% of H1B visas were going to Indians, but the system came under Trump’s scrutiny, and he decided that these visa-holders were taking away jobs from Americans, so regulations were tightened, making it harder for companies to give them to non-Americans.

Although it’s not all bad, because the House of Representatives has also recently passed a Bill to remove country-wise caps for H1B visas, which means that the wait times for Indian applicants will be shorter (but this is still pending the Senate’s approval, and then Trump has to sign it into law).

Tariff Tiff

The ‘America first’ principle is causing Trump to revisit the US’ trade deficits with friends and allies, and he has decided that India has been applying ‘unfair’ tariffs to the US.

The casualties? Harley Davidsons, American whiskey, and... almonds. In a series of retaliatory moves, the two countries have slapped tariffs on each others’ products. Trump says he wants tariffs substantially lessened on American motorbikes and whiskey, while India has responded by increasing tariffs on American products like Californian almonds and walnuts.

Friends Don’t Let Friends Buy Iranian Oil...?

Although the US had initially granted six friendly countries, including India, an exemption from its sanctions on Iran so that they could meet their oil needs, that generosity has ended.

The US sanctions on Iran are due to its perception that Iran is on its way to building nuclear weapons – the economic sanctions are aimed at bankrupting the nation before they get there.

But India is an oil-hungry country, the second-largest importer in the world, and Iran fulfils its needs at low and attractive prices.... So being asked to stop importing entirely is a tall order.

US Can’t Bear Russian Arms

Iran’s not the only friend of India’s that the US has a big problem with. Russia is also on the receiving end of US sanctions, this time under CAATSA (Countering American Adversaries Through Sanctions Act).

India is buying the s-400 Triumf missile defence system from Russia, one of the most advanced missile defence systems in the world. A payment plan that sidesteps CAATSA has even been figured out.

‘Preferred’ No More?

Another casualty of the tariff tiff is India’s removal by the US from the Generalised System of Preferences (GSP). The GSP is a US trade program by which certain developing countries were given advantageous trade terms to assist in their growth.

At the same time as removing India from this GSP program, the US Senate passed a law that brings India on par with the US’ NATO allies for the purpose of defence cooperation – a move that shows the US, notwithstanding trade issues, is still very much invested in India as a partner.

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