India, US To Hold Talks Amid Heated Rhetoric From Washington

India and the United States are set to reopen talks on tariffs this week despite growing rhetoric from Washington against New Delhi’s trade policies.

The US trade representative for South Asia, Brendan Lynch, will be in New Delhi for one day of talks on Tuesday, Indian chief negotiator Rajesh Agarwal said. The talks will be held as part of bilateral trade negotiations, Agarwal added without going into more detail.

The move comes after US President Donald Trump struck a more conciliatory tone in statements last week and expressed optimism that they could finalise a trade deal.

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Despite that, however, top White House officials have maintained an aggressive stance on India. On Monday, Trade adviser Peter Navarro reiterated his criticism for New Delhi’s purchases of Russian oil.

“Indian refiners got in bed with the Russian refiners immediately after the invasion and they’re making out like bandits,” Navarro said in an interview with CNBC.

Meanwhile, earlier on Saturday, US Commerce Secretary Howard Lutnick criticised India for a lack of agricultural purchases from the US.

“The relationship is one way, they sell to us and take advantage of us. They block us from their economy, and they sell to us while we are wide open for them to come in [and] take advantage,” Lutnick said in an interview with Axios.

“India brags that they have 1.4 billion people. Why won’t 1.4 billion people buy one bushel of US corn?” he said.

India has maintained it purchases Russian oil to meet the needs of its economy, adding that it does not intend to give in to US pressure. Meanwhile, India’s policies do not permit any import of grains that are genetically modified (GMO). A large majority of corn grown in the United States is GMO.

An earlier US visit to New Delhi, planned from August 25-29, was cancelled after talks hit major roadblocks, as New Delhi resisted opening its vast agricultural and dairy sectors.

But Sergio Gor, Trump’s nominee to be ambassador to India, said last week that the two sides were “not that far apart” on tariffs, and differences would be resolved in the next few weeks.

Growing tariff impact

A revival of potentially lower tariffs drove some gains in Indian shares, which rose to two-month highs on Tuesday.

Indian markets have been reeling as they price in the impact of high levies after Trump last month slapped a punitive 25% levy starting August 27 as ‘punishment’ for India’s Russian oil purchases. So, Indian exports effectively face overall tariffs of 50%.

India’s exports to the United States fell to $6.86 billion in August from $8.01 billion in July, trade ministry data released on Monday showed.

Total goods exports fell to a nine-month low of $35.10 billion in August from $37.24 billion in July, while the trade deficit narrowed to $26.49 billion.

The full impact of higher tariffs from the United States on Indian goods imports will be felt next month as the punitive tariffs kicked in from August 27, exporters said.

New Delhi’s discord with Washington has coincided with increased contacts with Beijing. Prime Minister Narendra Modi visited China for the first time in seven years last month to attend a summit hosted by President Xi Jinping.

Modi was also seen holding hands with Russia’s President Vladimir Putin.

• Reuters, with additional editing and inputs from Vishakha Saxena

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Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]