Shashank also cautioned that India-US relations cannot be treated as a “presidential decision” every few years. “There needs to be a consistent framework that goes beyond personalities,” he said, referring to Trump’s claim that he personally stopped a nuclear conflict between India and Pakistan by linking it to trade discussions.
Former diplomat Gurjit Singh agreed, saying the collapse of the earlier trade discussions had more to do with geopolitics than with economics. “The talks fell apart after sanctions were imposed over India’s continued purchase of Russian oil. That complicated everything,” Singh said. He added that India cannot be expected to sign a deal on the same terms as ASEAN countries because its domestic structure and energy dependencies are very different. “If the US rolls back the penalties or reduces them to 15–16%, talks could move forward again,” he said.Former Indian Ambassador to the World Trade Organization Jayant Dasgupta said there was room for compromise but cautioned against pressure on agricultural concessions. “India could live with an average tariff of around 15%, but GM crops are a red line,” he said. Dasgupta added that trade reciprocity must be mutual, and both sides should aim for a “fair landing zone” where tariffs and access obligations are balanced.
Trump, who is currently in South Korea after stops in Malaysia and Japan, has said he has finalised a trade deal with Seoul and is optimistic about one with China ahead of his meeting with President Xi Jinping tomorrow. He also reiterated his interest in a trade pact with India, saying he has a “great relationship” with Prime Minister Narendra Modi.
Meanwhile, India is also advancing negotiations with the European Union. Commerce Minister Piyush Goyal recently said substantial progress has been made on outstanding issues in the India-EU trade talks. With parallel negotiations underway with both the US and the EU, India’s trade diplomacy is now at a critical juncture — one that, as former diplomats emphasise, will depend less on tariff rates and more on the predictability and trust in the trading environment.
Below is the excerpt of the discussion.
Q: Let’s start with the US. Donald Trump says he’s going to have a trade deal with India soon. From several quarters, we’ve been hearing that a deal is now in the final stages and only needs the blessings of Donald Trump and Prime Minister Narendra Modi. What do you think will be the right moment for this to happen, and what will be the victory both sides would be looking at?
Singh: If President Trump is once again saying that a trade deal with India is imminent, he is perhaps having a conditioned reflex, because in the last three days he has signed so many trade deals — mostly one-sided ones — with countries in the region that he’s probably got used to rolling over people and saying, “This is my trade deal,” and people seem happy to sign it, even though it is disadvantageous to them.
Now, where India is concerned, it is my understanding that before President Trump went ballistic on India with regard to Russian oil and Pakistan, a trade deal was perhaps close to conclusion. Then it fell apart because additional requirements were projected, and sanctions were placed because we were buying Russian oil. This was not part of the original discussion on the trade deal. Therefore, the deal is now much more complicated due to President Trump’s various statements on Operation Sindoor, on how he managed India and Pakistan, and on his remarks about India’s ties with Russia, and cozying up to Pakistan and now even China — all of which places us in an unhappy geopolitical space.
So, from a sweet spot early in the Trump administration to a bitter spot is where we find ourselves. Therefore, unless a trade deal is fully negotiated and ready to be signed, I don’t think it is done.
Q: Ambassador Dasgupta, Donald Trump has struck one-sided deals with Thailand, Cambodia, and other nations just the way he wanted to. With India, that’s going to be difficult because India wants a competitive edge with the average tariff compared to Bangladesh, Sri Lanka, Cambodia, Thailand, or even Indonesia. Do you think that what has happened over the last few days creates momentum for a trade deal, or will it be difficult for exactly this reason?
Dasgupta: I read something in the paper quoting President Trump saying that we will have something like 15% tariffs for India. That is something India would be looking for as a prerequisite for signing any deal. Of the 50% tariff on India, 25% is for buying Russian oil and that has to be rolled back for sure — there can be no compromise on that. The 25% reciprocal tariff imposed from the 7th of August also has to be reduced substantially.
I think India can accept perhaps 15% or so because most countries, including Vietnam, Indonesia, and Cambodia, are in the range of 19–20%. The balance would be restored if that happens.
But having said that, there are two other issues. One is about agricultural products. If the Trump administration makes a big deal out of pushing in GM soya, corn, and other GM products, that will be a no-go. That could spook the whole deal.
From the statements emanating from both the Commerce Secretary, who was in Washington about a week ago, and from the Commerce Minister, it appears that they are close to concluding the talks. But one also hears what Minister Jaishankar said at the ASEAN meeting — that it is time for the world to stop having double standards between what they preach and what they practise. The target was obviously both the US and the EU, which are sanctioning countries or entities trading with Russia for oil and gas, while they themselves continue to buy Russian oil and gas — in the case of the EU — and uranium for energy purposes, in the case of the US.
Q: Ambassador Shashank, there still seems to be no understanding of India’s sensitivities around the recent India–Pakistan conflict. Donald Trump, even today while speaking to business leaders in South Korea, said that he stopped the war. He claimed he spoke to both Prime Ministers, who wanted to continue fighting, but he told them that he wouldn’t do trade if they didn’t stop fighting — and then they stopped. He also praised Prime Minister Modi, saying, “I really like Prime Minister Modi. He’s a really nice guy. He’s a hell of a tough guy. He’s the kind of guy you want to have as your father.” Is that an olive branch, or do you feel those repeated references to the India–Pakistan conflict make it politically difficult for the Prime Minister to agree to a trade deal?
Shashank: Firstly, I would say that it’s the uncertainty about tariffs that affects bilateral trade much more than the actual tariff imposed. Even if they want 50% or 15%, the commodities that can still be sold in the American market perhaps will go; the others will find alternative markets over a period of time. There will naturally be pain for exporters and manufacturers, but the way tariffs have been introduced from time to time — and the continuing uncertainty — prevents exporters and importers from planning their trading relationships.
That is something very important for President Trump to understand. As a businessman, he should know that markets should be kept stable.
As regards the India–Pakistan conflict, India has very clearly said that Operation Sindoor is still on. Whether that particular phase of fighting ended, and who was responsible, is debatable. Maybe President Trump believes he conveyed some views to Pakistan not to use nuclear weapons — since Pakistan has repeatedly said earlier, and even now, that it would use nuclear weapons if it felt its existence was under threat. But Pakistan’s existence is under threat because of its own domestic issues and its problems with all its neighbours. So, it should not try to put that on India or seek to draw President Trump into its internal problems.
Q: Ambassador Gurjit, does India have a choice here? Can we live without a trade deal? Because there’s now ample commentary from the World Bank and IMF that if India does not get a positive trade deal and these 50% tariffs continue, it will impact India’s GDP growth. For next year, they’ve downgraded India’s GDP growth by about 0.2–0.3%. Going forward, if we don’t have a deal and continue with these tariffs, will this continue impacting India’s GDP growth on a year-on-year basis?
Singh: That’s an important question. This is why we can’t do the kind of deal several ASEAN countries have done, where they’ve simply opened their markets to American products at 0%. India can’t do that — that’s one essential difference between India and others. Similarly, unlike South Korea, Japan, or even the EU, India cannot promise hundreds of billions of dollars of investment into the United States to offset low tariffs. So, India is a unique case by itself.
Can we survive? I think if we can reduce the sanctioned 25% tariff for buying Russian oil, then we can negotiate bringing it down from 25% to about 15–16%, as has been reported in the press. But as Ambassador Shashank correctly says, it’s the uncertainty — not only of the Trump administration but also of Indian exports’ competitiveness — that is hurting us.
During Trump 1.0, they removed all the GSP benefits, impacting our traditional exports like leather, textiles, gems and jewellery. It was about a $5.6 billion hit to our exports, but we didn’t squeak much; we absorbed that hit. Even today, Indian companies exporting to the US have adjusted to the increased tariffs, either through pricing or by raising consumer prices, and they seem to be finding a way out.
I think this requires a detailed analysis of whether India’s critical engagements — on semiconductors, electronics, solar energy, defence products, aircraft purchases, and pharmaceutical exports, among others — can somehow be saved from these excessive punitive tariffs.
Watch accompanying video for entire discussion.
