Untrustworthy States of America; Let’s build trade ties BRIC by RIC

Since the government is forced to go for a tectonic shift in its trade diplomacy, it needs to take a cross section into confidence and this includes the exporters, the importers, trade bodies, and above all the opposition. Mere assurances that the government will fully protect India’s interests are not good enough. These must be backed with actions to support the bizmen entering the hitherto unchartered territories

We have believed - and we do believe now - that freedom is indivisible, that peace is indivisible, that economic prosperity is indivisible - Indira Gandhi

Much like in politics (or politricks!), there can be no permanent friends or enemies in international relations. Yesterday’s friends could be today’s enemies and today’s foes could turn out to be friends tomorrow. And Defence Minister Rajnath Singh says there are only permanent interests. Let us add one more dictum – all is fair in love, war, and geopolitics.

India has been under pressure right from 1947 to join bloc or the other and it was due to the statesmanship of Jawahar Lal Nehru India led and managed a very effective non-aligned movement with one common interest -to have a credible voice for the developing and the poor nations. So, we had the freedom to deal with the west and the Communist blocs. The way India maintained its interests was clear in the way Indira Gandhi struck a defence deal with Brezhnev of the then USSR and Dr Manmohan Singh inked the nuclear deal with the US. And such major developments had taken place without much drama, but of course the opposition slammed Indira for moving away from the US and bashing Manmohan Singh for giving in to US pressure.

But today, PM Narendra Modi faces criticism not for his foreign or trade policy, but for not acting in time to give tit-for-tat to his untrustworthy friend Donald Trump. The Modi government’s silence on Trump’s claims, more than 40 times, of using trade as a weapon to enforce a ceasefire during Operation Sindoor, was deafening. Despite Modi repeatedly referring to Trump as his friend, raising slogans such as ‘Ab Ki Baar, Trump Sarkar’, the PM did not say: Dear friend, you are wrong!

Modi’s policy towards Russia may have been dictated by the cheaper oil that India bought from it, but the dealings with China have not been stable, to say the least. On the Galwan clash 2020, the opposition keeps nudging Modi on getting justice for the 20 soldiers killed. The PM has been on a denial mode as he has said no one entered the Indian territory nor any piece of our land captured.

In another instance, External Affairs Minister S Jaishankar scoffed at suggestions to take on big economic power China.

We must read these in the context of the government’s proclaimed anti-China attitude, ban on Chinese social media apps such as Tik-Tok, unleashing the agencies such as the ED on media houses on the charge of accepting China funds, and Modi's call for literally boycotting foreign (read Chinese) goods.

In his indirect reference to China-made idols of Hindu gods, Modi went to the extent of saying that the eyes of Lord Ganesha’s idol are so small that one does not know if they are open or not. In the same vein, Modi asked Indian traders to adopt Swadeshi and display it with sign boards proclaiming: We sell only Swadeshi goods.

Even in his latest Mann Ki Baat, Modi repeated his Swadeshi pitch.

These lines are okay when you are playing to the gallery. But the rapid expansion of India-China bilateral trade since the beginning of this century has propelled China to emerge as India’s largest goods trading partner in recent years. This is not my invention. This is what the Indian embassy in Beijing says on its website.

“Though trade volumes have grown exponentially, they have also led to the biggest single trade deficit India is running with any country,” it says. And here is something more worrisome: Our trade deficit concerns are two pronged. One is the actual size of the deficit. Two is the fact that the imbalance has continuously been widening year after year to reach $99.21 billion in 2024-2025, the embassy says.

The embassy’s trade table shows that the deficit has more than doubled during the Modi government’s rule since 2014-15.

What does this mean? We import more from China than what we export to it. While focusing on America-plus policy, we need to look at enlarging our export basket. As our Beijing embassy said, our predominant exports over the last 5 years have consisted of iron ore, light naphtha, p-xylene, shrimps and castor oil. There are also issues over opening market access in a rigid Chinese economy. Two major sectors that will take big hits with Trump's Tariff Card are the Indian seafood and textiles and garments. Can we divert our shipments to Beijing?

Modi met with Xi Jinping, at Tianjin and they reaffirmed that the two countries are “development partners and not rivals”, and that their differences should not turn into disputes. This is music to ears. Diplomacy and trade must go hand-in-hand.

Let us turn on to our long-term reliable friend, Russia. Our Moscow embassy data shows that key Indian exports to Russia include agri-products (fish, shrimp, rice, tobacco, tea, coffee, grapes), chemical products, pharmaceuticals, iron and steel, ceramic products, aeroplane components, machinery, glass and glassware, clothing and knitwear, leather goods, rubber articles, electrical machinery, and surgical tools.

Major imports from Russia are dominated by oil and petroleum products, fertilizers, bituminous substances, mineral fuels, mineral waxes, machinery, equipment, precious metals and stones, wood, pulp and paper products, metals and vegetable oils. Bilateral trade in services has remained stable over the past five years, with a trade balance favouring Russia. In 2021, it totalled $1.021 billion.

At the cost of being dubbed as bragging, let me reiterate that we did advocate revival of the RIC axis to beat Uncle Sam Donald’s bullying. But the opening and strengthening of the new trade channels must fully be transparent and based on self-respect. We hope the BJP and the RSS will not compromise on Swabhiman in our foreign relations. Remember, RSS supremo Mohan Bhagwat says the Sangh advises the BJP on key issues. Trade relations are based on money, but foreign relations demand the fine art of balancing. Our relationship with the US has proved that trade drives diplomacy, while the ties with Russia (and even China) showed that diplomacy is key to trade.

Since the government is forced to go for a tectonic shift in its trade diplomacy, it needs to take a cross section into confidence and this includes the exporters, the importers, trade bodies, the States, and above all the opposition. Mere assurances that the government will fully protect India’s interests are not good enough. These must be backed with actions to support the bizmen entering the hitherto unchartered territories. Meanwhile, there is a piece of good news from the BBC that a federal appeals court has ruled that most of Donald Trump's tariffs are an overreach of his use of emergency powers as president.

The so-called reciprocal tariffs - imposed on nearly every country the US trades with - are being illegally imposed, the US Court of Appeals said on Friday, the BBC reported.

Trump has understandably brushed aside this ruling and the issue is bound to land in the US Supreme Court. Whatever happens in the top court, Trump will continue to be adamant and not exhibit any signs of easing up, unless the US business community tightens its screws on him. Afterall, Trump is a businessman first, politician next.

In this long discussion, dominated by Sino-Indian relations, let us not lose sight of Indo-Canadian relations. Trump, who had gone to the extent of daydreaming that Canada will be the 51st State of the USA, has played a tough trade tariff card with the northern neighbour. Enemy’s enemy is his best friend. India will do well by quickly grabbing the opportunity to start building bridges with Canada.

There is a lot more to talk about geopolitics and trade diplomacy. May be next time?

(The columnist is a Mumbai-based author and independent media veteran, running websites and a YouTube channel known for his thought-provoking messaging.)