The India DividendSeptember/October 2019 181
India’s crisis o faith in Trump’s America as a security partner.
Strong and enduring policy dierences on trade, Iran, and Russia have
complicated the relationship even further. Last September, in response
to a decline in the rupee’s value against the dollar, the Modi government
announced taris on various imports, such as jet fuel, plastics, gemstones,
and shoes. After many delays in reaching a settlement in its trade dispute
with the United States, it also imposed retaliatory duties on U.S. agricul-
tural products and metals in response to U.S. taris on steel and alumi-
num imports. New Delhi is also concerned about the increased diculties
that Indian nationals face when applying for H1-B visas, which allow
workers to take specialized jobs in the United States. Washington, for its
part, would like to reduce barriers to U.S. access to the Indian market,
which has been hampered by taris on agricultural and manufactured
goods, the latter stemming from the “Make in India” initiative, designed
to spur domestic manufacturing. U.S. companies in India also face re-
strictions on data collection and price constraints on medical products.
The United States and India are currently discussing how to resolve
these issues, but the structure o a potential deal remains unclear.
Washington could grant New Delhi a lasting exemption to its steel and
aluminum taris, perhaps in exchange for speci¿c concessions on the
pricing o medical devices and information technology imports. But
the Trump administration is unlikely to end its trade confrontations
anytime soon. And India is unlikely to open its markets signi¿cantly
in the near future: trade liberalization remains at the bottom o the
India’s list o future economic reforms, largely because o the country’s
desire to protect its economy from foreign competition for as long as
possible. Modi, for all his other economic reforms, has actually taken
India a step backward on trade by raising taris to generate revenue.
Despite the danger that increased protectionism could undo the coun-
try’s progress since it liberalized its trading regime in the early 1990s,
imperil Modi’s dream o India’s becoming a “leading power,” and exac-
erbate the trade frictions with Washington, there appears to be neither
the vision nor the appetite in New Delhi to liberalize trade.
Iran is another major point o contention. India, whose ties to Iran
go back centuries, strongly supported the 2015 Iran nuclear agreement;
it had previously worried that a Shiite nuclear power would inevitably
set o a cascade o proliferation in the Sunni Arab world, leaving India
with many more Muslim nuclear powers to its west. After the Trump
administration withdrew from the Iran deal, in May 2018, India joined