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When Modi meets Trump, buying defence equipment shouldn't be on the agenda

Neeraj Thakur | Updated on: 26 June 2017, 23:12 IST

When Prime Minister Narendra Modi meets US President Donald Trump at the White House on Tuesday, there will be a lot at stake for India.

Trump's 'America First' policy threatens lakhs of jobs in India in the BPO and IT sectors. The same policy is also a threat to India's $36 billion pharmaceutical industry, by way of delayed approvals for Indian drug makers.

Before the meet, there are reports that India will purchase 22 unarmed drones, worth more than $2 billion, from the US. There is also talk of India agreeing to purchase F-16 fighter jets from the US, a deal that India resisted for many years due to the obsolete design of the fighter jet.

So, should Modi ink these deals?

What has changed since Obama

When Modi met Trump's predecessor Barack Obama for the first time in 2014 in the US, the two leaders wrote a joint op-ed column in The Washington Post, setting the tone for a strong relationship in the coming years.

But Trump is not Obama, and this time, Modi, on arrival, has written a solo piece for the Wall Street Journal, in which he has tried to sell the idea of the Goods and Services Tax, which is to be implemented across India from 1 July. GST is supposed to increase the ease of business in India for US companies.

Away from the business front, there is no doubt that Obama saw India as a strong ally in the US's fight against terrorism, and as a bulwark against China.

Trump, on the other hand, through his speeches, has made it clear that he holds India responsible for taking away American jobs, taking unfair monetary advantage of the Paris climate accord, and enjoying a trade surplus.

Business is about give and take. But what if there is a lot of give and no take?

Much has been made of the proposed defence deals mentioned before. However, for India, there are no positive signs – Trump's US isn't likely to budge from its plans to keep the allotment of working visas to Indian engineers difficult.

What Modi must do

Having world class drones and fighter jets is important for India, but Modi's visit to the US should not be just about purchasing big-ticket defence equipment from the US. Why? Because many other countries are willing to supply their defence equipment to India, on better terms.

The real deal for India lies in convincing the US to keep its H-1B visa policy India-friendly. India's IT industry generates revenue worth $150 billion and employs 10 million people. And even though the US has not given effective shape to its anti-foreign workforce visa regime, Indian IT companies are under pressure to limit their hiring from the pool of Indian engineers.

Therefore, Modi, for all the dole-outs being given to the US, must keep India's demands focussed on the need for a liberal visa regime.

Moreover, India also needs to ensure that the interests of the Indian pharma industry are not hurt anymore, and there is no delay in approvals to drugs manufactured by Indian companies.

When Modi meets Trump on Tuesday, the news channels will go to town about Modi being the first PM to have dinner with Trump. The Indian workforce, in the meantime, will keep its fingers crossed.

First published: 26 June 2017, 23:12 IST
Neeraj Thakur @neerajthakur2

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