US-India trade deal very soon, says Donald Trump after meeting with PM Modi

US president says it will be great if PMs of India and Pakistan can 'work out something on Kashmir'

US President Donald Trump on Tuesday promised a trade deal with India “very soon”, and a larger deal down the line. 

Asked if any trade deal was expected between the two countries, Trump, after his bilateral talks with Prime Minister Narendra Modi on the sidelines of the UN General Assembly meeting, told reporters: “We are doing very well...I think very soon we will have a trade deal. We will have a larger deal later on.”

Modi said, “As far as trade (between India and the US) is concerned, I’m happy that our Petronet has signed an MoU of $2.5-billion investment in the energy sector.”

After the meeting, Foreign Secretary Vijay Gokhale said Commerce Minister Piyush Goyal was in New York for discussions on a trade deal. “He has been having discussions with US Trade Representative Robert Lighthizer, and significant progress has been made on a number of issues. The two leaders were optimistic of us reaching a trade agreement in the near future,” Gokhale said.

Modi and Trump’s bilateral meeting, and the US president’s comments on a trade deal between the two countries, came on a day when Trump warned China for its trade practices. He also slammed the World Trade Organization (WTO) for allegedly allowing China to get preferential treatment despite the size of its economy, saying the institution needed reforms.

In his speech before the UN, Trump made a fresh attack against the global order, saying that “globalists” would not triumph. 

“The future does not belong to globalists. The future belongs to patriots," he said. 

In his address at the ‘Howdy Modi’ event in Houston on Sunday, Trump had said he was working to increase American exports to India, and committed to ensure Indian people had access to finest products with the “beautiful phrase” of “Make in USA” emblazoned on them. At that event, Modi had said he was meeting Trump soon and expected a deal. He had praised Trump for the latter's expertise in the "art of the deal", and that he was learning from the US president.

The US has continued to put pressure on India to initiate talks on a full-fledged free trade agreement (FTA) over the past year, but New Delhi has consistently pushed back. Commerce Department officials have argued that India stands to gain little from such a pact as import duties for goods entering the US are already among the lowest in the world.

India wants a mutually acceptable 'trade package' that provides an amicable solution to major grouses from both sides, according to a senior trade negotiator. India is considering dismantling its current price cap regime for coronary stents with a trade margin policy. It may also allow lower duties on import of certain information and communication technology products such as high-end mobile phones and smartwatches from the US which may make iPhone products cheaper in the country.

In return, the US has offered to step back from its aggressive posturing on 'reciprocal taxes'. Trump has also repeatedly accused India of being a 'high tariff nation', referring to duties placed on US-made Harley Davidson motorcycles.

The meeting between Modi and Trump lasted 35-40 minutes, Gokhale said. “We are quite satisfied with the meeting. We raised the challenges we face with regard to terrorism, especially in Jammu and Kashmir,” the foreign secretary said.

When asked on Kashmir, Trump told reporters that he hoped Modi and Pakistan PM Imran Khan would “work out something”, and seemed to be distancing himself from any mediation between the two South Asian neighbours. Trump had met Khan on Monday and once again offered to mediate between Pakistan and India on the Kashmir issue if both sides agree.

"It will be great if they (Modi and Khan) can work out something on Kashmir,” he said. “I really believe that Prime Minister Modi and Prime Minister Khan will get along when they get to know each other, I think a lot of good things will come from that meeting,” he said.

On how he saw the Pakistan PM admitting that his country’s ISI was training the Al Qaeda, Trump said, “...The prime minister (Modi) will take care of it." Taking forward their bonhomie from the ‘Howdy Modi’ event in Houston on Sunday, the US president praised Modi as a “great gentleman and a great leader”.

“I remember India before was very torn. There was a lot of dissension; fighting and he brought it all together. Like a father would bring it together. Maybe he is the Father of India. We will call him the Father of India,” he said.

Pointing to Modi, he said, “They (Indians) love this gentleman to my right. People went crazy, he is like an American version of Elvis.” Modi said he was thankful to Trump that he came to Houston. “He is my friend but he is also a good friend of India," Modi said.

The foreign secretary said, “PM Modi made it clear that we are not shying away from talks with Pakistan but we expect certain concrete steps to be taken by Pakistan before that, and we don't find any efforts by them”.

India-US trade talks had run the risk of coming apart earlier this year, after the US had cut off India’s duty-free access to the American market under its largest preferential trade scheme, the Generalized System of Preferences (GSP).

Subsequently, India had raised import duties on key high value imports from the US, mostly among agricultural products such as apples and almonds. Reinstatement of GSP benefits has remained a key part of the Indian demand list, according to sources.

On the table

What India wants

• Restoration of GSP benefits for Indian exports

• Dropping threats of reciprocal tariffs

What the US wants

• Lower import duties on high-value tech products like smartphones

• Tweaks in current price cap regime for coronary stents

Sources say the US has asked India to confirm the current economic slowdown and that the turmoil in the domestic aviation sector will not affect civilian aircraft purchases by New Delhi. Low-cost carrier Spicejet has ordered 205 aircrafts from US manufacturer Boeing.

In the works for more than a year, the proposed package has seen trade officials from both sides meet as many as six times to try and hammer out a deal.

On the other hand, the promise to ramp up purchase of crude oil from Texas has already been fulfilled by India. On Saturday, Petronet LNG Limited (PLL) signed an MoU with American natural gas supplier Tellurian Inc, to provide it with up to 5 million tonnes per annum of liquefied natural gas. In 2017, India got its first consignment of crude oil from the US, 42 years after Washington DC stopped oil exports in 1975. Indian Oil Corporation and Bharat Petroleum had placed orders for over 2 million barrels from the US which was pegged to boost bilateral trade by up to $2 billion.