Cloudy skies over US and EU trade deals

In both cases, India must prepare for worst-case scenarios

- R JAGANNATHAN

At periodic intervals, Indian officials raise the possibility of a trade deal with the United States (US), and also a free trade agreement (FTA) with the European Union (EU). A briefing by the external affairs ministry a few days ago said that both deals were being actively pursued with the aim of concluding a fair, balanced and mutually beneficial agreement.

After the recent, speedy conclusion of trade deals with Oman and New Zealand, there may be a tendency to assume that both the US and EU deals could happen reasonably soon, especially the latter. After all, European Commission President Ursula von der Leyen and European Council President Antonio Costa will be in New Delhi as guests of honour for Republic Day. What could be better than getting the deal initialled when they are here?

A few days ago, India’s ambassador to the US, Vinay Kwatra, met Sergio Gor, the US ambassador to India, to push for an early trade deal. Chief Economic Advisor V Anantha Nageswaran said the deal was nearly done, but was perplexed by delays. Still, he volunteered that he would be surprised if it does not get done by the end of the financial year (i.e. by March 2026).

There is, actually, less reason for optimism on the US deal today thanks to one man: Donald J Trump. The US President has been changing the goalposts for India repeatedly. It started with a demand that India reduce its trade deficits by buying more from the US; then it became about acknowledging his alleged role in brokering a ceasefire with Pakistan last May: then it became about Russian oil; and two days ago he said it was all about India making him happy.