Modi-Trump meeting shifts focus on trade & economy

TN Ashok

Prime Minister Narendra Modi has visited United States, as part of his aggressive foreign policy which has already taken him to more than 30 nations and meetings with important leaders of European Union including the French President, British Prime Minister, German Chancellor, Russian President and others.
Modi’s visit to United States and his anxiousness to meet President Donald Trump is reflective of India’s concern on trade issues, US pulling out of the Paris Climate change pact, and the new VISA regime which has hit the Indian IT industry which was not only contributing more than $2 billion in taxes to US government but at least $200 billion in terms of foreign exchange revenue to the exchequer in India. IT companies have nearly halved the number of migrant workers to United States, who enjoyed lower salaries than their American counterparts, and started hiring locally at higher rates resulting in a drain on their earnings. US companies are also not happy with the Trump decision to stop outsourcing jobs to India in the IT sector as it has increased their overheads making their products less competitive in the European market.
As both Indian government and American industry was concerned about a freer economic environment and Trump restrictions on outsourcing jobs, the round table meeting Modi held with top CEOs of US companies has become the talks of the talk town besides eliciting reviews about Modi’s earnestness to smoothen trade and economic ties and promote business between the two countries. US is one of the largest trading partners of India now. US business is still not happy with the slow pace of economic reforms and wants the Modi administration to tighten it and speed it up so that they can enlarger their investments in India.

India’s Prime Minister Narendra Modi met Sunday with the crème de la crème of corporate America, in a CEO roundtable in sharp contrast with a U.S. President Donald Trump’s recent tech roundtable.

Modi attended the high-profile meetings set up via the Indian embassy, before his official engagement with Trump on Monday, in which executives reportedly expressed serious concerns over India’s current regulatory environment, making it difficult for them to invest further and expand their presence on the subcontinent. Some mentioned bureaucracy and a tough business climate as concerns as well, a CNBC report from Washington said.

A World Bank’s 2017 annual report on the ease of doing business globally says India ranked at 130 out of 190, with poor scores on factors including starting a business, resolving insolvency and paying taxes. Silicon Valley was well-represented at the meeting, with Apple’s CEO Tim Cook, Amazon’s CEO Jeff Bezos, Google’s Sundar Pichai and Adobe’s Shantanu Narayan attending.When CNBC asked Cook how the meeting went, the Apple CEO responded by saying “fantastic.”Other sectors were represented as well.

Walmart’s Doug McMilon , who attended. sought a 1:1 meeting with Modi after the roundtable to convey his interest in continuing to expand his company’s retail presence across India. Other attendees included Mondelez CEO Irene Rosenfeld, MasterCard’s Ajay Bhanga, Carlyle Group’s David Rubenstein, IHS Market’s David Yergin and JP Morgan CEO Jamie Dimon. He was spotted having lunch with former Uber CEO Travis Kalanick,who was also positive about his interactions with the Indian leader.”He [Modi] is always very receptive, he is open. He is very smart, very receptive, very actuary….I don’t think there were any sticking points,” Dimon reportedly told CNBC.

JPMorgan, Uber and Kalanick didn’t immediately respond to CNBC’s requests for comment, sent outside office hours, on the topics discussed at that meeting.The CEOs’ praise of Modi was a sharp contrast to Trump’s meeting last week with tech CEOs.Photographs of that event spread across social media, largely because Apple CEO Tim Cook, Microsoft CEO Satya Nadella, and Amazon CEO Jeff Bezos all looked less than happy to be there.

The President Donald Trump and Prime Minister Narendra Modi meeting at the White House the following day on Monday saw trade and economic investment taking center stage. President Trump said Monday he looked forward to continuing a relationship with India where the leaders would work together “to create jobs in our countries, to grow our economies and to create a trading relationship that is fair and reciprocal.”

On Monday, retired four-star U.S. Army Gen. Jack Keane told FOX Business that the U.S. will likely announce a $2 billion unmanned surveillance aircraft deal with the country. This comes as Lockheed Martin (LMT) seeks a government contract to build F-16 fighter jets for the Indian air force.Furthermore, President Trump said the United States will be exporting more energy to India as the two countries work on finalizing contracts.
Still, creating a fair trade relationship with India remains a priority for Trump. The United States had a $24 billion trade deficit with India in 2016, according to the U.S. Census Bureau, and this year has so far racked up a deficit worth $7 billion. President Trump said Monday, during a joint press conference with Prime Minister Modi, that it is necessary for India to remove economic barriers on exports into its markets.

One issue that dominates talks between Modi and Trump and created some tension was the private one on President Trump’s focus on reforming the United States’ H-1B visa program. Indian technology firms are a big beneficiary of the program, but Trump issued an executive order in April designed to review how the program is impacting American workers and whether companies are exploiting loopholes and undercutting the domestic labour force. Soon after this order was signed, Indian IT companies lost billions in trading at the leading stock exchanges in the country especially Bombay Stock Exchange and National Stock Exchange. And those listed on NASDAQ also took a tumble.

US media reports were more enthusiastic about Modi’s approach and less enthusiastic about Trump because of his restrictive policies bordering on protectionism, which the US administrations had been preaching against in the past. “ “ If relationship experts were to write about Prime Minister Narendra Modi and US President Donald Trump, they would have concluded that both are definitely from different planets, perhaps from Mars and Uranus”, writes Anita, a researcher on foreign policies, in the Hudson Review.

In many ways, Trump is what Modi isn’t, she said adding to begin with, he won an election that was predicted to lead to his defeat. He marched into the White House without an iota of experience or history of holding a public office. Unlike Modi’s ‘Nation First’ philosophy, Trump was more a poster man for an ”I, Me and My Family” credo. His history of running businesses that profited through evasion of tax and putting his family at the forefront, leading to charges that his children have benefitted from his office was quite disturbing.Trump, unlike Modi, rose from a privileged background — a wealthy billionaire, who led a life of extravagance and had a controversial history with many women. His election was seen more as a reflection of the American anger, frustrations and fears, instead of the deserved denouement of Trump’s political life. So, how does a guy from Mars gel with a guy from Uranus? However , says Anita, On evidence put out in the public domain through choreographed chemistry, warm handshakes, bright smiles, uproarious laughter, mutual admiration and awkward hugs, it seems the two leaders of the world’s largest democracies hit it off quite well.

Considering the bonhomie on display during the Modi-Trump meeting, India can be quite optimistic of its chances with the US president. If Trump really intends to treat Modi as a “true friend”, sees India as an ally in the war against terrorism and radical Islam, he might just make some vital relaxations in his “America First” policy.

Early signs suggest two things. One, that the Trump administration is willing to address India’s concerns on Pakistan and terror. Just before the meeting, the US declared chief of terrorist organisation Hizbul Mujahiddin, Syed Salahuddin a global terrorist. Then, in a joint statement, it asked Pakistan to not allow the use of its territory for terror attacks. All welcome signs for India.Secondly, it is clear that Trump wants to balance China by flirting with India. The two countries agreed on Maritime cooperation in the Indian Ocean, a move primarily aimed to keep China under check. The US also approved sale of drones to India — the first non-Nato country to be accorded the privilege — to help New Delhi keep a close watch on the Indian Ocean and Chinese submarines that may eye the waters. A joint maritime exercise with Japan joining the two countries is also in the offing, primarily to signal to China the rise of the new axis.

“I also thank the Indian people for their contributions to the effort in Afghanistan, and for joining us in applying new sanctions against the North Korean regime. The North Korean regime is causing tremendous problems and is something that has to be dealt with, and probably dealt with rapidly,” Trump had said in his statement. This was a clear message to both Pakistan and China, who have not been so eager to address the US concerns about these two regions.Trump, of course, wants to tell the US that he is using his clout to address the US business concerns. He said his country wants to benefit from the growth of the Indian economy and its appetite for defence deals.
Modi and Trump share a lot in common — their anxieties about China, distrust of Pakistan, hardcore base of “nationalist” supporters and, of course, the desire to be the world leaders in social media.

Monday’s meeting showed that two leaders from opposite ends of the spectrum can find a common meeting ground. Both metaphorically and geographically, the East could remain the East, and the West could remain the West. But the twain can indeed meet, the Hudson review says. In conclusion, Modi’s 5th visit to US and his eagerness to meet Trump before other leaders, especially from the Indian subcontinent, was essentially to fast forward economic ties removing differences and concerns on a freer environment, faster pace of economic reforms, garnering US support against Pakistan on the terrorist front and against China on the economic front, because China is the most leading trading partner of US.

Modi’s warm handshakes and bear hugs with US President Trump, French President Macaron, UK PM Theresea Meyer and Australian Prime Minister Malcom Turnbull are all firm body languages sending strong signals to the world that India is not only the same social and economic page as these countries and a warning to countries that want to destabilise India : Don’t Mess With ME. Pictures on newspapers and social media of Modi go far beyond just photo opportunities. (T N Ashok is a Corporate Consultant, Resident Editor and Writer of Economic Affairs) [IFS]

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