RPT-BREAKINGVIEWS-Migration jeopardises Modi's US charm offensive

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Shritama Bose

MUMBAI, Feb 11 (Reuters Breakingviews) - India is pulling out all the stops to be on Donald Trump's good side. The country has already made tariff concessions and fielded a planeload of deported immigrants ahead of Prime Minister Narendra Modi's visit to meet the U.S. President at the White House. But it is migration, not trade, that will be the sticking point in bilateral relations.

Narrowing India's $35 billion trade surplus with the United States should be manageable. Earlier this month, New Delhi undertook wide-ranging cuts to duties on American imports from Harley Davidson HOG.N motorcycles to components used by Apple AAPL.O to build smartphones. The country can also pledge to buy more American weapons and oil. Shipments of the latter amounted to $5 billion, or just 4% of bilateral trade, in the year to March 2024.

What Modi can offer on migration is far less straightforward. Trump has vowed to deport millions of illegal workers in the country and as of 2022, India was the third-largest source of undocumented immigrants in the U.S. behind Mexico and El Salvador, per data from Pew Research Center.

The country also supplies a huge chunk of legal skilled workers: India accounts for 72% of so-called H-1B visas, which allow companies from Amazon AMZN.O to Alphabet GOOGL.O, as well as Indian giants like Tata Consultancy Services TCS.NS, to hire specialised overseas workers such as software engineers. The programme benefits both sides: Big Tech gets access to lower-cost talent while India's skilled labour can find employment. But visa issuances have shrunk in recent years and the programme is getting an intense backlash from some of Trump's supporters.

A possible deal could see Modi agree to accept deported Indians back into the country without fuss in exchange for U.S. officials to speed up H-1B visas. But a repeat of the spectacle this month of hundreds of handcuffed people alighting from a U.S. military plane would be politically embarrassing, and shines an ugly spotlight on India's lack of high-quality jobs.

The problem for Modi, though, is that he has a weak hand with Trump with the fortunes of India's top tycoons hanging in the balance. Infrastructure magnate Gautam Adani is battling fraud charges levelled by U.S. federal investigators and the Securities and Exchange Commission, which his Adani group denies. The White House can also squeeze access to cheap Russian oil that helps India to keep inflation low, and which its largest company, Mukesh Ambani's Reliance Industries RELI.NS, is processing, or punish India with tariffs for pushing trade transactions in non-dollar currencies. A lot rides on Modi's U.S. charm offensive.

Follow @ShritamaBose on X.

CONTEXT NEWS

U.S. President Donald Trump has invited Indian Prime Minister Narendra Modi to visit the White House during February 12-14, Reuters reported on February 4, citing an unnamed White House official.

Separately, India slashed custom duties on motorcycles, such as those from Harley Davidson, with engine capacity of 1,600 cc or more, to 30% from 50% on fully built imports in the government’s annual budget announced on February 1. New Delhi also cut average tariffs to 11% from 13%, Finance Secretary Tuhin Kanta Pandey told Reuters in an interview after the budget.