BREAKINGVIEWS-Trump’s India bullying will yield short term wins

By Shritama Bose

MUMBAI, Aug 11 (Reuters Breakingviews) - India is open to trimming its purchases of Russian oil to avoid a 50% tariff on its U.S.-bound goods that would render its exports unviable. That makes sense. The $4 trillion economy can manage without Moscow's narrowing discounts on crude. But President Donald Trump’s attack on the South Asian nation will only make it double down on its multipolar foreign policy in other ways. Prime Minister Narendra Modi’s visit to China later this month, his first in seven years, is a step in this direction.

Barring a deal between Washington and Moscow to end the war in Ukraine, New Delhi will probably have to bend to the U.S. will because its scope to retaliate through hard trade measures is limited. The pushback so far is soft: India is pausing talks to buy General Dynamics Land Systems' Stryker combat vehicles, Javelin missiles developed by Raytheon and Lockheed Martin LMT.N and some Boeing BA.N planes, Reuters reported on Friday, citing three unnamed Indian officials. The government, though, insists the purchases continue per "extant procedures".

Cutting out Russian oil ought to get the tariff back down to 25% because the increase in the U.S. president's executive order last week was tied to those purchases. It would also test whether Trump intends to further shift the goalposts to force India into a sharper break in its trade relations with Moscow: 21% or roughly $13.5 billion of its imports from Russia last year were non-oil purchases including vegetable oils and fertilisers.

Getting the overall tariff rate negotiated down further looks a stretch. For a start, Washington is demanding India import genetically modified soybeans from American farmers. They are hurting because China has halted its purchases of the U.S. legume. Yet if India steps up, that would amount to abandoning its decades-old restriction on GM food crops.

So India's most powerful retaliation, for now, may be a symbolic show of longer term intentions. Modi's visit to China for a summit of the multilateral Shanghai Cooperation Organisation marks a thaw in their bilateral ties and a growing desire in New Delhi to find ways to tap Chinese expertise and capital. Trade between the neighbours grew 56% over the five years to end March to $128 billion. National Security Adviser Ajit Doval visited the Kremlin last week and India's air force chief on Sunday even hailed Russian-made S-400 missiles as a "gamechanger" in a military face-off with Pakistan that took place back in May.

By forcing India into the same boat as China, the U.S. leader may achieve some short-term wins but he is also cementing the incentive for New Delhi to keep its relationship with Russia warm and pull closer to its direct neighbour.

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CONTEXT NEWS

India has put on hold its plans to procure new U.S. weapons and aircraft, Reuters reported on August 8, citing three unnamed Indian officials familiar with the matter.

Discussions on New Delhi's purchases of Stryker combat vehicles made by General Dynamics Land Systems and Javelin anti-tank missiles developed by Raytheon and Lockheed Martin have been paused due to Washington's order to apply a 50% import tariff on Indian goods, the report added.

After the report was published, state-backed All India Radio said reports of a pause in talks around U.S. defence purchases are "false and fabricated", citing a Ministry of Defence statement. The various cases of procurement are progressing according to "extant procedures", the broadcaster quoted the ministry as having said.