Category: Trade

‘Whatever You Charge, I’m Charging’: Trump Reveals Modi Couldn’t Stave Off Tariff Hike

‘I told Prime Minister Modi yesterday — he was here. I said, “Here’s what you do. We’re going to do — be very fair with you.’

New Delhi: US President Donald Trump’s public comments on how his conversation on tariffs with Prime Minister Narendra Modi went has unveiled a fact that the Indian government has been keen to side-step – that India has not avoided a tariff hike despite the purported bonhomie that Modi has been keen to project with Trump.

In an interview to Fox News along with his billionaire adviser, Elon Musk, Trump said, according to the White House transcription:

“(E)very country in the world takes advantage of us, and they do it with tariffs. They makes — make it — it’s impossible for him to sell a car, practically, in, as an example, India. I don’t know if that’s true or not…”

Musk then chips in with a note: “The tariffs are like 100% import duty.”

“Now if he built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair,” Trump said of Musk’s plans.

Trump then went on to describe his conversation with Modi:

“And I said, “You know what we do?” I told Prime Minister Modi yesterday — he was here. I said, “Here’s what you do. We’re going to do — be very fair with you.” They charge the highest tariffs in the world, just about.”

When Fox’s Sean Hannity asks if the tariffs are “36%”, Trumps says it is much higher and Musk says that auto imports are “100%.” However, India’s new EV policy offers a 15% reduction on import duties provided the carmaker makes a substantial investment in the country and sets up a local factory – something that is likely to help the Tesla CEO.

“Yeah, that’s peanuts,” Trump goes on to say, agreeing with Musk. “So, much higher. And — and others too. I said, “Here’s what we’re going to do: reciprocal. Whatever you charge, I’m charging.” He goes, “No, no, I don’t like that.” “No, no, whatever you charge, I’m going to charge.” I’m doing that with every country.”

The US president then goes to say that “nobody can argue” with him.

“You know, the media can’t argue — I said — they said, “Tariffs — you’re going to charge tariffs?” You know, if I said, like, 25 percent they’d say, “Oh, that’s terrible.” I don’t say that anymore — because I say, “Whatever they charge, we’ll charge.””

India has not addressed whether the meeting between Trump and Modi was effective in actually stalling the hike in tariffs that Trump had been promising.

Is India On the Way To Becoming Mortgaged to the US?

Trump’s aggressive tone and Modi’s apparent acquiescence have raised concerns about India’s ability to safeguard its interests.

Prime Minister Narendra Modi’s two-day visit to Washington last week has been hailed by many domestic foreign policy experts as a resounding success. “Defying traditional skepticism and recent anxieties about India-US relations, Prime Minister Modi and US President Donald Trump laid out an ambitious roadmap to deepen bilateral ties,” remarked a respected foreign policy analyst. Another commentator echoed this sentiment, stating, “Modi’s visit was both symbolically significant and substantively fruitful.”

However, several international media outlets have been sharply critical of India’s handling of the visit, particularly its response to President Trump’s disparaging remarks, some of which were made in Modi’s presence. Ahead of the visit, a prominent British publication argued that America’s assertive nationalism could effectively reduce India to a “partially subordinate ally,” a stark contrast to India’s long-standing self-perception as a “wholly independent actor.”

Over the past decade, and especially in recent years, India has positioned itself as a leader of the Global South. Yet, as China expands its influence across Asia, Africa, and South America, championing multilateralism, India’s growing reliance on the US risks undermining its credibility among developing nations. This is particularly concerning as India aims to double bilateral trade with the US to $500 billion within five years through a proposed trade agreement. Critics question whether India can simultaneously advocate for the interests of the Global South while deepening ties with a global superpower. It would be tantamount to running with hares and hunting with hounds.

Also read: By Ignoring the Mistreatment of Deportees, India Is Undermining Its Own Dignity

A bilateral free trade agreement with the US raises further questions, given the stark structural disparities between the two nations. For instance:

  • Population: India’s 1.4 billion people far exceed the US population of 347 million.
  • Income Levels: The US per capita income of $37,683 is 16 times higher than India’s $2,343.
  • Agriculture: Nearly 800 million Indians depend on agriculture, compared to just 25,000 heavily subsidised US farmers. The Indian peasants are small with meagre landholdings.
  • Workforce: India’s workforce, including both organised and unorganised sectors, stands at approximately 565 million, dwarfing the US workforce of 168 million.
  • Industrial structure: India’s economy relies heavily on fragmented small and medium enterprises, unlike the US’s more consolidated industrial base.

While India enjoyed a $38billion trade surplus in 2022, with bilateral trade totaling  $157 billion, President Trump has made it clear that a free trade agreement would aim to reverse this imbalance. Such a deal could severely impact India’s agriculture and pharmaceutical sectors, which are vital to providing affordable medicines and sustaining livelihoods. India’s robust pharmaceutical industry, a legacy of reforms initiated by Indira Gandhi in the 1970s, has been a lifeline for affordable healthcare globally. A trade deal that undermines this sector could have far-reaching consequences.

An unequal partnership?

The joint statement issued by Trump and Modi, particularly on trade, appears heavily skewed in favor of the US. During a press conference on February 13, Trump launched a scathing critique of India’s trade policies, accusing the country of imposing “very, very high tariffs” and creating an uneven playing field. “India’s tariffs are 30, 40, 60, even 70% on many goods,” he said, adding, “We want a level playing field, which we think we’re entitled to.”

Trump also emphasised the US’s intention to sell more oil, gas and liquefied natural gas (LNG) to India, framing it as a solution to the trade deficit. “We can make up the difference easily with the sale of oil and gas,” he stated. While the two leaders announced a new energy agreement to boost US exports, critics argue that this focus on fossil fuels contradicts global efforts to combat climate change, especially after the US withdrew from the Paris Agreement in 2016.

Also read: Three Things About India that Shackled Indians Returning Home Tell Us

The 33-paragraph joint statement highlighted a bold new goal – dubbed “Mission 500” – to double bilateral trade to $500 billion by 2030. However, the rhetoric surrounding the negotiations suggests an unequal footing. Trump’s aggressive tone and Modi’s apparent acquiescence have raised concerns about India’s ability to safeguard its interests.

A threat to multilateralism?

Trump’s unilateral trade policies, including tariffs on Canadian, Mexican and Chinese goods, as well as steel and aluminum imports, have already undermined the World Trade Organisation’s (WTO) rules-based system. His administration’s disregard for multilateral trade norms signals a troubling shift toward protectionism. For India, this poses a significant challenge, especially as Trump prepares to unveil reciprocal tariffs on April 2, which could further strain bilateral relations.

Historically, trade negotiations under the General Agreement on Tariffs and Trade (GATT) and its successor, the WTO, have allowed developing countries like India to maintain higher tariffs to protect their economies. However, Trump’s accusations against India and other developing nations for building trade surpluses ignore this context. His approach risks dismantling the global trading system that has, until now, provided a framework for fairer negotiations.

A risky gamble?

India’s efforts to strengthen ties with the US under the current administration may come at a high cost. By aligning itself too closely with a protectionist and unilateralist US government, India risks not only its economic interests but also its standing as a leader of the Global South. As negotiations for a bilateral trade agreement begin, India must tread carefully to ensure that its aspirations for growth and self-reliance are not compromised in the pursuit of a lopsided partnership.

The road ahead is fraught with challenges. India’s ability to navigate this complex relationship while maintaining its strategic autonomy will determine whether it emerges as a true global leader or becomes increasingly subordinate to US interests while mortgaging India.

Ravi Kanth Devarakonda is a financial journalist based in Switzerland.

How Should India Respond to the Trump Tariff War?

The Trump-led global tariff war is changing the dynamics of global trade. It is expected that this will give impetus to the regionalised nature of international trade and inter-regional trade agreements.

As Donald Trump returned to the White House, the landscape of the global trading system became more complex. Trump fired its first round of tariff bullets on its major trading partners including Canada, Mexico and China. The next set of target countries are the European Union, Vietnam, and India which may face the brunt of Trump tariff war. The evolving trade policy stance of United States provides enough signals to its trading partners to diversify their trade from the US market. Shifting trade supply chains is not easy in the world of global value chains, where inputs are sourced globally and traverse multiple borders before reaching the final market. This becomes more difficult due to the sheer size of the US economy and its presence in global supply chains.

On February 13, the White House issued a Memorandum for the Secretary of the Treasury and other relevant departments titled “Reciprocal Trade and Tariffs”. The Memorandum states that the United States intends to follow a customised approach for each foreign trading partner based on five different areas: tariffs imposed on United States products, unfair and discriminatory taxes, costs to United States’ business and consumers stemming from disguised trade barriers, manipulation of exchange rates, and any other unfair trade practices.

Under the Trump America First Trade Policy, the challenges for India are manifold in a highly complex and uncertain global trading environment. It is important to see how India’s trade policymakers respond to the Trump Tariff War in the dilemma of opening markets and protecting its domestic political imperatives. Amid these challenges, it is imperative for India to adopt a calibrated approach to secure a deal with Trump and mitigate the potential risk of a full-blown tariff war.

‘Unfair’

First, the United States has expressed concerns regarding “unfair trade practices” amounting to a trade deficit of US$ 45.6 billion in favour of India. This clearly demonstrates that tariff cuts are the top priority of the United States in enhancing its market access. India has already taken a few steps in this direction, but it still needs to do more to calm Trump.

India needs to put more effort into simplifying its complex and multi-tiered tariff structure which keeps changing every year. The rationalisation of the import tariff structure will certainly signal that India is undertaking serious reforms in its trade policy framework. Moreover, it will also help the country address issues related to the “inverted duty structure”.

Deficit

Second, India can identify specific tariff lines in which the United States can replace China in the Indian market, though this will not be so easy, given their varying export profiles. But there exists some scope for capital goods and other product categories. Such product categories need to be identified, and possible options should be explored to increase imports from the United States. This will not only help India to reduce its trade deficit with China but will also strengthen India-United States ties in containing China’s trade dominance.

Furthermore, India can increase its imports of defence, oil, and gas from the United States. This holds promise as a way to address the United States’ concerns regarding increasing trade deficits.

Labour

Third, India’s trade policymakers should aim to secure better market access for labour-intensive exports. Trump had withdrawn the benefits of the Generalised System of Preference (GSP) in 2019, which has been hurting our exports to the US market. India should ask for it to be restored if a comprehensive reciprocal tariff arrangement is being worked out. This will help India regain its lost market access in some product categories such as articles made of leather, rubber products, toys, garments and pharmaceuticals. Enhanced market access will not only boost exports, but will also contribute employment generation in the manufacturing sector.

Sector

Fourth, some policy experts contend that India should not explore possible options for a “sectoral trade agreement”. It is important to understand that a sectoral trade agreement with the United States will not be of interest to India, given that it maintains high tariff rates. Any tariff cut under a sectoral FTA based on the United States’ policy of reciprocity of trade and tariffs will benefit the US at the cost of Indian industry. Reciprocity tariff reduction in a sectoral agreement involve offering equal tariff cuts across tariff lines under negotiation. This could be more challenging for India. A selective approach to tariff reductions under bilateral trade talks seem to be the best option for India.

World

Finally, the Trump-led global tariff war is changing the dynamics of global trade. It is expected that this will give impetus to the regionalised nature of international trade and inter-regional trade agreements. Mega regional trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will further focus on reorganisation of supply chain networks within regional blocs. The EU has recently finalised a trade agreement with Mercosur (Brazil, Argentina, Uruguay, and Paraguay) to promote trade and investment. It is clear that the Trump America First Trade Policy will compel its trading partners to focus on regional and bilateral trade. Therefore, it is crucial for India to conclude its bilateral trade agreements with the EU, UK, Australia, Canada, and Latin American economies to protect its economic and trade interests.

Surendar Singh is an associate professor at the Jindal School of Liberal Arts and Humanities, OP Jindal University, Sonipat. Views are personal.

This piece was first published on The India Cable – a premium newsletter from The Wire & Galileo Ideas – and has been updated and republished here. To subscribe to The India Cable, click here.

India, US and Economic Goals in an Age of Deal-Making

India must approach the US strategically, knowing that Trump’s priorities shift with political winds.

Prime Minister Narendra Modi’s visit to the US for talks with President Donald Trump will have vital implications for the future of India-US bilateral partnership, which is further likely to have global implications too. Upcoming discussions between the two leaders will centre on defence cooperation, trade relations, and countering China’s growing economic and military influence. 

When it comes to Trump, Modi is no stranger to grand gestures, and his embrace of Trump during his first elected term was no exception. From bear hugs to packed stadiums and rousing speeches, Modi has consistently bet big on personal diplomacy – a strategy that has yielded significant results.

However, believing that his warmth toward the US president would shield India from Washington’s hard-nosed economic nationalism may have been overly optimistic. While Modi leaned on personal rapport to influence trade dynamics, Trump had a different playbook in mind.

Trump never spoke of India in terms of a true partnership; rather, his rhetoric was steeped in the language of power. He described India as “smart,” “tough,” and “sharp” – words that were less about praise and more about acknowledging India as a formidable competitor in trade. 

For Trump, trade is a weaponised tool, less about mutual benefit and more about strategic leverage – a perspective that often left India on the receiving end of tough negotiations.

India has already sought to rationalise duties and tariff barriers, and is considering slashing duties on select American goods in an attempt to smoothen ties. Proposed tariff reductions on products such as motorcycles, steel, and electronic items signal a calculated effort to defuse potential trade frictions. 

Notwithstanding the announcements made in the Union Budget, this move presents a crucial policy dilemma: should India make strategic concessions to secure long-term diplomatic gains, or should it maintain a protectionist stance to safeguard domestic industries?

For India, a well-calibrated trade policy must strike a balance between import substitution and targeted liberalisation. A hybrid approach – leveraging tariffs to nurture nascent industries while gradually easing restrictions on high-value imports – could enhance competitiveness without deterring foreign investments. 

At present, India imposes duties exceeding 100% on more than 20 imported items from the US, a structure that may soon require reconsideration. Successfully navigating these complexities will determine whether India solidifies its position in the global trade arena or finds itself struggling against shifting economic tides.

Modi’s gamble

For decades, Trump has championed tariffs as the ultimate economic weapon, believing they can strong-arm countries into submission and secure better trade deals. While he approaches the use of similar tactics with BRICS nations, the reality is far more complex. 

Rather than strengthening domestic industries, tariffs often disrupt global supply chains, inflate consumer costs, and provoke retaliatory measures. The US-China trade war is a prime example, and India has not been spared either. With Trump’s “weaponised tariffs” reshaping global commerce, Indian exporters have faced heightened costs, restricted access to key markets, and unpredictable trade policies that complicate long-term economic planning.

The irony of protectionism is that it frequently backfires on the country imposing it. Higher tariffs mean increased prices for domestic consumers and businesses, contributing to inflation and diminished competitiveness. India, too, has found itself caught in this cycle, raising duties on American goods in retaliation. 

Navigating through this tariff war by cutting duties on US imports could ease diplomatic tensions for now, which might help secure better trade terms and offer Indian consumers cheaper goods. However, this approach carries risks, particularly in vulnerable sectors like agriculture and manufacturing, where an influx of American products could weaken domestic industries.

Source: United States Census Bureau.

At the heart of this dilemma is, as shown in the graph above, the fact that India-US bilateral trade has been increasing over the years, growing more than sevenfold in the last two decades alone. Yet, the unpredictability of US trade policy under Trump has made policymakers in India and around the globe more sceptical. 

As this chauvinism gains global momentum and intensifies further, which will limit trade and economic interactions, India faces a crucial decision on whether it should shield itself from global volatility or pivot toward a more proactive trade strategy.

Economists like Dani Rodrik argue that excessive reliance on global trade leaves countries vulnerable to sudden economic shocks, something that Trump’s tariffs have demonstrated all too clearly. While Washington views India as a key ally, it is in India’s best interest to maintain strategic autonomy. 

This means strengthening economic ties beyond the US and reducing its dependence on any single trade partner. Diversifying trade relationships with Europe, Southeast Asia, and Africa, while simultaneously investing in domestic resilience, could help India navigate an increasingly fragmented global economy. The challenge lies in balancing deeper engagement with the US without becoming overly reliant on it.

India’s window of opportunity

Donald Trump’s presidency can easily be marked as one driven by unpredictable politically convenient decisions, many of which reveal opportunities for India. Take the TikTok ban saga, for instance. Initially branded as a threat to U.S. security, TikTok was slated for a complete shutdown unless acquired by an American company. 

However, after heated rhetoric and executive orders, the decision fizzled out, leaving TikTok operational in the US. The backpedalling wasn’t rooted in new evidence or legal clarity but rather shifting political priorities. It’s a pattern: Trump’s decisions often catered to what gained the most public support or aligned with his voter base’s sentiments, regardless of earlier commitments.  

This inconsistency is not limited to TikTok. In this last term Trump railed against China’s trade practices, North Korea’s Kim Jongun for his nuclear belligerent activities but later again praised both of them when it suited negotiations. 

For India, Trump’s track record of contradictions and opportunism is an opening. It suggests that the US, under such leadership, isn’t guided by steadfast trade principles but by the art of deal-making. This creates a scope for India to pitch a unilateral trade agreement tailored to mutual strengths in key sectors like technology, clean energy, and pharmaceuticals. India’s prowess in IT and affordable medicine production aligns perfectly with American needs. Clean energy cooperation, amid growing global focus on sustainability can further strengthen ties.  

Keeping this in mind, India must approach this strategically, knowing US priorities shift with political winds. A long-term trade strategy resilient to political cycles is only a 50-50 bet. Instead of retaliatory tariffs or reactive diplomacy, India can offer stability which helps both nations. 

 

Amidst ‘25% Aluminium Tariff’ Warning, Modi May Meet Trump With Concession Plan: Report

Three unnamed officials who spoke to Reuters said India is considering tariff cuts in at least a dozen sectors.

New Delhi: Close on the heels of US president Donald Trump saying that he plans to introduce 25% tariffs on all steel and aluminium imports into the US, Reuters has reported that Indian Prime Minister Narendra Modi is preparing tariff cuts ahead of his meeting with Trump later this week.

“Any steel coming into the United States is going to have a 25% tariff,” he told reporters on Air Force One a day ago, according to AP. When asked about aluminium, he responded, “aluminium, too” will be subject to the trade penalties.

The proposed tariffs could hurt India, even though it is not one of the largest exporters of iron and steel products to the US.

Three unnamed officials who spoke to Reuters said India is considering tariff cuts in at least a dozen sectors, from electronics to medical and surgical equipment, and chemicals, “to boost US exports in line with New Delhi’s domestic production plans.”

The officials also said that concessions were being considered on items that India usually buys from the US or is looking to buy, like dish antennas and wood pulp.

Officials told Reuters that the Indian government is in a “wait and watch” mode and is hoping for a “mini trade deal” to be signed after talks between Modi and Trump.

Later, Trump’s top economic adviser Kevin Hassett told Reuters had a lot to discuss with Trump. “India has high tariffs that lock out imports,” he also noted.

The European Union, meanwhile, has said it has “not received any official notification” of extra duties to be imposed on exports.

Note: This report has been updated to noted Kevin Hassett’s comments.

Vizag Steel: A People’s Steel Plant and the Struggle Against Privatisation

Without the steel plant, development in Visakhapatnam and in the state as a whole would stagnate.

The Union government recently announced a Rs 11,440 crore revival package for the Visakhapatnam Steel Plant. Chief minister Chandrababu Naidu and other key leaders are touting this as a major achievement for the National Democratic Alliance coalition in Andhra Pradesh, claiming that it resolves all of the plant’s difficulties.

However, the committee leading the movement against privatisation has declared this package a temporary fix. They maintain that only allocating the plant its own mines will truly save it, vowing to continue their struggle until this goal is met. A deeper examination of the situation is necessary to understand the facts.

Struggle against privatisation

On January 27, 2021, the Union cabinet sub-committee decided on a strategic sale or privatisation of the Visakhapatnam Steel Plant. For the past four years, all the plant’s trade unions, united under the Steel Plant Protection Struggle Committee, have been protesting this decision. Dharna camps at the plant’s main entrance and the Visakhapatnam Municipal Corporation office have been in place since February 12, 2021.

The steel plant’s current difficulties primarily stem from its lack of dedicated (captive) iron ore mines. The government’s “Make in India” slogan rings hollow as it exports iron ore to China and Japan while denying allocation to the public sector Visakhapatnam Steel.

Visakhapatnam Steel is the only steel plant in India, public or private, without its own mines. Forced to purchase iron ore on the open market, it pays Rs 4,000-8,000 more per ton than its competitors. Profitable until recently, the plant has incurred losses over the past four years due to disruptions in raw material supply (including coal), delayed railway wagons for exports, deliberate production capacity reduction and the closure of two of its three blast furnaces. These troubles are a result of deliberate actions, not mismanagement.

Visakhapatnam Steel boasts unique advantages. Its coastal location facilitates easy import and export. It also possesses modern technology, a lean workforce and higher productivity compared to other public sector steel plants.

Naidu, tasked with protecting the state’s largest heavy industry, has instead chosen to build a private steel plant with a dedicated port at Nakkapalli in Anakapalli district, recently requesting the prime minister to allocate iron ore mines for it. This move appears to undermine Visakhapatnam Steel.

Commissioned in 1991 with a 1.6 million ton production capacity, the plant has steadily expanded to 7.3 million tons using its own resources. It possesses the infrastructure, including land, to further increase capacity to 20 million tons.

Realising the Union government’s goal of ‘atma nirbhar Bharat (self-reliant India)’ requires significant increases in domestic steel production. While China produces over a billion tons, India produced only 138.5 million tons last year. The government aims to increase this to at least 200 million tons, but achieving this will require heavy investment in the Steel Authority of India Ltd. (SAIL). Despite Visakhapatnam Steel’s potential for easy expansion to 20 million tons, the government’s bent towards privatisation is a roadblock in achieving this goal.

Beyond its coastal advantage and modern technology, Visakhapatnam Steel has 22,000 acres of land and net assets exceeding Rs 3 lakh crore. Steel giants aim to acquire it at a discounted book value.

The decision to privatise aligns with the Modi government’s neoliberal economic policies and its stated belief that “the government has no business doing business.”

Without the steel plant, development in Visakhapatnam and the state would stagnate. Public sector enterprises like the steel plant fuelled Visakhapatnam’s growth into Andhra Pradesh’s largest city (population 2.5 million) and the country’s third largest (682 square kilometres). Known as the industrial capital of united Andhra Pradesh, the plant directly employs 30,000 and supports 100,000 livelihoods. With over 4,000 employees from Scheduled Castes and Scheduled Tribes, it reflects social justice through reservation policies.

Its 8,500-quarter township represents a mini-India. Monthly salaries, contractor payments, etc., inject approximately Rs 100 crore into Visakhapatnam’s economy. During the COVID-19 crisis, the plant demonstrated social responsibility by supplying oxygen nationwide. Numerous small industries in Visakhapatnam rely on the plant. It plays a vital role in the state’s economic and social fabric.

Politically, the plant influences election outcomes. Recent parliamentary and assembly elections saw Telugu Desam Party candidates win by large margins in Gajuwaka and Visakhapatnam constituencies, largely populated by steel plant employees, due to their promise to save the plant.

20 years of struggle behind the plant

This plant possesses a unique history born from struggle. The 1966-67 “Visakha Steel — Andhra’s Right” movement fiercely opposed the Indira Gandhi government’s attempt to relocate the plant to Karnataka. Thirty-two lives were lost, thousands injured and 67 MLAs (including 52 Communists) along with seven Communist MPs resigned in protest.

This two-year struggle forced the government to concede. Indira Gandhi laid the foundation stone in 1971, though funding delays stalled progress. The Janata Party eventually allocated funds and construction began. About 64 villages were relocated, and 16,500 farmers sacrificed 22,000 acres for the plant. Nearly 6,500 remain unemployed despite promises and over 200 workers died during construction. Finally, in 1991, P.V. Narasimha Rao dedicated the plant to the nation. 

India possesses abundant iron ore. The central government has granted 100-year iron ore allocations to all private and public sector steel plants, including Tata, Bhilai, Bokaro, Durgapur and Rourkela. Visakha Steel must compete with these plants despite lacking its own mines.

Right to its own mines

Section 17(1)(b) of the Mines and Minerals (Development and Regulation) Act, 1957 mandates raw mineral mine allocation to public sector undertakings. Visakhapatnam Steel’s own mines are its right. The 1985 detailed project report for the plant stipulated National Mineral Development Corporation allocation of mines in Bailadila’s four and five blocks. The continued denial of this allocation is malicious, a deliberate attempt to force losses and justify privatisation. In 1998-99, the Vajpayee government referred the plant to BIFR citing consecutive losses, sparking another major struggle with severe repression. The plant not only survived it but expanded its capacity.

The original proposal for a Gangavaram Port on steel plant land was intended to support its operations. However, the TDP government pressurised the Union government, seizing 1,400 acres of plant land for a private port, now owned by Adani. The Union government’s total investment has been only Rs 4,890 crore. In return, the plant has contributed over Rs 54,000 crore in taxes and dividends, a record unmatched by any private company.

Privatising Visakhapatnam Steel undermines the interests of Andhra Pradesh and the larger cause of social justice. For the past four years, the people of Andhra Pradesh and steel plant workers have waged a continuous struggle to protect it. This struggle will persist until the decision is reversed, the plant receives its own mines and is strengthened. The people and workers of the state are at the forefront of development. Supporting this movement and protecting public sector enterprises built with public funds is true patriotism.

A. Aja Sarma is general secretary, Forum for Development of North Andhra.

This article was originally published on The Wire Telugu. 

US NSA Announces Easing of Export Controls on Indian Entities, Stresses on Shared Democratic Values

Jake Sullivan acknowledged that the vision for civil nuclear cooperation, outlined two decades ago by former US president George Bush and Indian prime minister Manmohan Singh, has not yet been fully realised.

New Delhi: In his final overseas trip as National Security Advisor, Jake Sullivan announced that the Joe Biden administration will remove restrictions on Indian entities from US export control lists to enhance cooperation in the civil nuclear field between the two countries, but emphasised that the bilateral partnership can only reach full potential by adhering to shared democratic values.

Sullivan made this announcement during his visit to New Delhi on Monday, January 6, just two weeks before the administration’s transition in Washington. The change comes as president-elect Donald Trump prepares to take office for his second term on January 20.

The senior Biden administration official made a public announcement of the decision at a speech delivered at the Indian Institute of Technology, Delhi.

He acknowledged that the vision for civil nuclear cooperation, outlined two decades ago by former US president George Bush and Indian prime minister Manmohan Singh, has not yet been fully realised.

“So today, I can announce that the United States is finalising the necessary steps to remove long-standing regulations that have prevented civil nuclear cooperation between India’s leading nuclear entities and US companies,” he stated.

Sullivan also noted that the formal paperwork would be completed soon, allowing entities previously on restrictive lists in the US to be removed and for them to enter into deeper collaboration with the US, its private sector, and its scientists and technologists, in order to advance civil nuclear cooperation.

He described this as the result of “India’s open and transparent engagement with our administration over the course off four years.”

According to the Entity List, India’s Department of Atomic Energy’s Atomic Research Center (BARC), Indira Gandhi Atomic Research Center (IGCAR), and Indian Rare Earths were subject to export controls, requiring case-by-case licence approval. This also extended to non-IAEA safeguarded nuclear power plants, fuel reprocessing and enrichment facilities, heavy water production facilities, and their collocated ammonia plants.

The presence of Indian organisations on US export control lists is not the sole obstacle to attracting more US firms to develop nuclear power plants in India. The primary challenge is often identified as India’s civil nuclear liability law, which permits plant operators to seek legal recourse against suppliers in the event of an accident.

Missile export control policies

A readout of the meeting between Jake Sullivan and his Indian counterpart, Ajit Doval, noted that the announcement was part of the briefing provided by the US official. Sullivan also highlighted recent changes to US missile export control policies under the Missile Technology Control Regime, announced last month, which are expected to enhance cooperation in civilian space initiatives.

In his speech, Sullivan not only listed the achievements in US-India cooperation, but outlined a vision for its future expansion through deeper collaboration, not only in emerging critical technologies but also in shaping international regulations for strategic technological domains.

“We’ve had to navigate our fair share of turbulence, legacy relationships, tensions over trade, as well as over human rights and the rule of law at home and abroad, but we’ve navigated these issues together with our eye on the long game, and our ability to do so reflects the deep and enduring resilience between the US and India,” he said.

However, he underlined, that deepening this collaboration can only be done on the foundation of shared “values.”

“And finally, our partnership can be most effectively sustained and can actually only reach its full potential if we live up together to the values that lie at the core of our democracies, respect for the rule of law that creates the conditions for dynamic growth, respect for pluralism and tolerance that powers innovation, and the protection of basic freedoms that unleash the human spirit,” said Sullivan.

The state of ties

Over the last year, the US has been repeatedly seeking “accountability” from the Indian government over ‘murder-for hire’ charges against an Indian government agent for attempting to assassinate a US-Canadian citizen, who is the legal counsel for pro-Khalistan organisation banned by Indian home ministry. Additionally, there has also had been criticism through US state department’s annual human rights country report about deteriorating human rights situation in India, which MEA had termed as being “deeply biased.”

Before his departure, Sullivan also called on prime minister Narendra Modi who posted that bilateral ties had “scaled new heights, including in the areas of technology, defence, space, biotechnology and Artificial Intelligence.”

The official US readout is largely similar to the Indian version. It says that Sullivan briefed Doval about the efforts to finalise
necessary steps to delist Indian nuclear entities, and updated export control policies under the MTCR that could boost commercial space
cooperation.

Note: This report was updated to include details on the White House readout.

Switzerland Suspends India’s Most Favoured Nation Status in Agreement to Avoid Double Taxation

Asked for comment, the external affairs ministry said it did not have further details on the subject.

New Delhi: Switzerland’s federal finance department said on Wednesday (December 11) that it was suspending India’s ‘most favoured nation’ (MFN) status under a treaty between the two countries on avoiding double-taxation.

It made this decision as it had determined India did not reciprocate Switzerland’s understanding of the MFN clause in the treaty.

Asked about the Swiss government’s suspension of India’s MFN status, the external affairs ministry said it did not have further details on the subject.

According to the MFN clause, which was added to the 1994 treaty by an amendment in 2010, rates of taxation at source agreed to between India and a third OECD country on dividends, interest, royalties or fees for technical services that were lower than that mentioned in the 1994 treaty would apply between Switzerland and India as well.

But a September 2023 ruling by the Indian Supreme Court in which the Switzerland-based Nestle was a respondent said that a notification under Section 90(1) of the Income Tax Act would be necessary for such ‘double taxation avoidance agreements’ to be given effect.

The Swiss finance department said on Wednesday that according the apex court’s ruling, India’s MFN status would not be directly applicable without such a notification.

The court also decided, Bern noted, that the third countries with whom tax rates were agreed to would have to have been OECD countries at the time of the agreement in order for the MFN clause to apply.

“On the basis of the Indian Supreme Court ruling, the Swiss competent authority acknowledges that its interpretation of para. 5 of the Protocol [containing a mention of the third country being an OECD member] to the IN-CH DTA [the treaty] is not shared by the Indian side,” Bern said.

It added: “In the absence of reciprocity, it therefore waives its unilateral application with effect from January 1, 2025.”

Bern’s decision will raise taxation at source rates for Indian entities in Switzerland to 10%.

They had been lowered from 10% to 5% in 2021 on account of the Swiss government noting that India had inked agreements with Lithuania and Colombia of a 5% tax rate in 2011 and that the latter two countries joined the OECD in 2018 and 2020 respectively.

However, the Supreme Court ruling meant that as Lithuania and Colombia were not OECD countries when their agreements with India were made, the subsequent adjustment of tax in the Indo-Swiss agreement would not apply, the Swiss finance ministry said on Wednesday.

External affairs ministry spokesperson Randhir Jaiswal during the weekly press briefing on Friday was asked for comment on the Swiss government’s decision.

“My understanding is that with Switzerland, because of EFTA [the European Free Trade Association], the double taxation treaty that we have, it’s going to be renegotiated. So that is one aspect of it,” he said.

Jaiswal continued: “The other one is this ‘most favoured nation’. I don’t have an update on it as to the details, etc. We’ll come back to you more on that account.”

Petrapole Sees Sharp Decline in Trade as Bangladesh Unrest Continues

Petrapole, South Asia’s largest land port, is a crucial trade and passenger hub. The decline in activity has hit border-dependent livelihoods hard.

Petrapole-Benapole border (West Bengal): The usually bustling Petrapole border, a vital link between West Bengal and Bangladesh, now stands eerily quiet, mirroring the political turbulence sweeping across Bangladesh. The usual flow of people and goods has drastically slowed, disrupting lives on both sides.

“Medical visas have been on hold for two weeks,” lamented Jaliluddin, who has come to India for medical treatment. “Only those with prior visas can enter. And with no public transport on the Bangladesh side, private vehicles are charging exorbitant fees.”

Petrapole, South Asia’s largest land port, is a crucial trade and passenger hub. Nearly 30% of India-Bangladesh land-based trade flows through this border. An average of 2.2 million people cross the border post on either side each year.

The decline in activity has hit border-dependent livelihoods hard. “The economic downturn began during COVID-19 and worsened with the political unrest,” explained Shamal Roy, a porter with 40 years of work experience. “Our registered porters have halved, and daily earnings have shrunk.”

Porters are finding it difficult to earn money due to decline in activity in the Petrapole international border. Photo: Joydeep Sarkar

The unrest has strained trade at Petrapole. “Yesterday, 418 trucks carrying goods like fruits and machinery left for Bangladesh, while 179 trucks with items like hilsa and jute entered India. These figures are below normal,” said Dhritiman Pal, a local businessman. “The Bangladesh economy is under severe strain, with dollar shortages and a lack of new orders.”

Shipra Sarkar was returning to Dhaka after a short visit to relatives in Howrah. The recent spate of violence on minorities began while she was out of Bangladesh. She expressed fears of escalating unrest. “There are rumours of criminal gangs demanding money and creating unrest in our area. I’m scared to go back, but it’s my home.”

However, not everyone shares her grim outlook. Nipa, a resident of Comilla, painted a relatively calmer picture. “While there’s unrest in certain areas, our locality remains peaceful. People of all faiths coexist harmoniously, and the roads are safe,” she assured.

Despite these differing accounts, Dhaka-based businessman Rahayan Kajal criticised the Indian media’s portrayal of the situation. “The Indian media is exaggerating the news,” he said. “While attacks, extortions, and assaults on minorities have occurred in certain areas, these incidents are localised. Even the Muslim majority is not immune to the threats posed by criminal gangs who are exploiting the political instability to extort money.”

Commuters near the India-Bangladesh border in West Bengal.

With no public transport on the Bangladesh side, private vehicles are charging exorbitant fees, many commuters noted. Many people also criticised India media’s coverage of the atrocities against minorities in Bangladesh. Photo: Joydeep Sarkar

Tapan Saha, a trader from Bongaon, was returning from Dhaka after a successful business trip. He shared a similar skepticism. “Everyday life in Dhaka seemed normal to me, but videos of unrest are absent from Bangladeshi media yet circulate on the web pages of the BJP [Bharatiya Janata Party]. It’s puzzling.”

A long stretch of the historic Jessore Road, linking Kolkata to Jessore in Bangladesh, is now lined with banners and saffron flags bearing the name “Sanatan Aikya Mancha.” The flags prominently feature images of BJP leaders, including Suvendu Adhikari, who is portrayed as a “Hindu Heart Emperor,” echoing the larger-than-life persona of Narendra Modi. 

Bengali social media is awash with reports of attacks on Hindu minorities in Bangladesh, alongside a provocative image allegedly showing the Indian national flag being insulted at a premier university in the neighbouring country.

“This is a sensitive issue,” Saha noted. “While upper and middle-class Bengalis are concerned, many are oversimplifying the problem. International diplomacy is crucial for a lasting solution.”

For those dependent on the Petrapole border’s economic activity, a resolution can’t come soon enough. “Petrapole’s economy is deeply linked to Bangladesh’s stability,” said businessman Pal. “Until normalcy returns, livelihoods here remain uncertain.”

Political parties make calculated move 

As expected, with Bangladesh as the backdrop, political parties have begun to calculate their gains in their own way. Moreover, two prominent local channels are providing non-stop coverage of the issue.

Recognising the stakes, the ruling Trinamool Congress (TMC) has taken a position that some within the party describe as ‘contradictory.’ On one hand, West Bengal chief minister Mamata Banerjee has expressed her willingness to align with the Union government’s stance on foreign affairs, including the developments in Bangladesh. On the other, she has called for the deployment of a UN peacekeeping force to Bangladesh during an assembly session. There is a debate on whether peacekeeping forces can be sent this way or whether there is such an opportunity at the diplomatic level. 

Petrapole international border, West Bengal.

Petrapole international border, West Bengal. Photo: Joydeep Sarkar

This seemingly dual strategy reflects Banerjee’s calculated effort to navigate complex political dynamics – reinforcing her appeal to the Muslim minority vote in West Bengal while simultaneously signalling solidarity with Hindu minority communities across the border to address broader electoral calculations, a move that even the BJP finds difficult to outrightly dismiss. It’s no surprise that she repeatedly says, “We love everyone.”

The ruling TMC’s stance is somewhat ‘haphazard,’ according to many within the party. The party’s mouthpiece on Wednesday wrote the headline of a report as: ‘The Yunus government’s incivility continues.’

Similarly, BJP spokesperson Mohit Roy said, “This is an international issue, and India must act decisively. We don’t consider her demand unjustifiable.” 

The Communist Party of India (Marxist) (CPI(M)) has called out the TMC for “aligning” with the BJP. 

“Before the BJP-led central government addresses international issues, the TMC appears to be aligning itself with the BJP’s stance within the state. Our party consistently advocates for the protection and security of minorities in every country, but talk of peacekeepers is premature unless a war-like situation arises,” said CPI(M) leader Sujan Chakraborty. 

Also read: At Talks Between Top Diplomats, India Says it Wants ‘Mutually Beneficial’ Ties With Bangladesh

Moreover, the arrest of a monk in Bangladesh, followed by allegations of attacks on minorities and the use of their ‘vulnerability’ as a weapon, has prompted Opposition parties in West Bengal to take to the streets again. Many believe that the role of a section of the Indian media in covering the Bangladesh incidents is providing ‘oxygen’ to this.

Not only is Opposition party leader Adhikari involved, the leaders of Hindu nationalist organisations are also organising programmes. Simultaneously, social media campaigns are underway.

Translated from the Bengali original by Aparna Bhattacharya.