Why India Must Hew the Middle Ground

When two elephants clash, the grass beneath them gets crushed. The United States and China are levying ever-escalating tit-for-tat tariffs on each other.

- SUNIL SHARAN

President Donald Trump of the U.S. is getting more and more aggressive vis-à-vis China, and China is responding with its "never yield" policy. Who knows what this spat will yield?

What's in it for India? Boxed into a corner, China is sidling up to India. Trump had imposed 26 percent reciprocal tariffs on India this month, but has now waived them off for 90 days. When the tariffs came into effect, the Indian government said nothing, but the day they were waived, Commerce Minister Piyush Goyal and External Affairs Minister S. Jaishankar said that India will not negotiate under gunpoint.

China, on the other hand, had no such qualms. It levied retaliatory tariffs on the U.S. almost immediately. President Xi Jinping of China has just visited South East Asian countries like Vietnam and Indonesia to rustle up support and to whip up anti-American sentiment. Who knows if he'll succeed?

India exports $85 billion of goods to the U.S. Further, India exports $110 billion of software services exports to the U.S., accounting for 54 percent of India's total software services exports. U.S. exports to India are valued at a mere $42 billion, making the trade surplus heavily in favor of India. India, however, faces a trade deficit of $100 billion with China.