Indian Prime Minister Narendra Modi. Photo: Xinhua

The moment Narendra Modi took office for his second term as prime minister of India, the White House began putting on pressure. On May 31, the administration of President Donald Trump announced that the concessions and exemptions enjoyed by India will be retracted from June 5 onward.

India is now being suppressed by the United States before it even grows into a global trading power. The irony of the situation is that US acting Secretary of Defense Patrick Shanahan was still advocating the “Free and Open Indo-Pacific” strategy at the end of the Shangri-La Dialogue in early June. What that shows is that the United States views India as a geopolitical chess piece to keep China in check, and not as a partner.

It has been suggested that the reason behind Trump terminating the concessions enjoyed by India was that the latter had failed to ensure fair and reasonable market access for the US in a number of industries, which has had a negative impact on American businesses. In typical Trump fashion, the motive behind sanctions is once again “something is unfair to the United States.”

On the surface, the United States went on the offensive because it has a trade deficit with India. As long as the United States has a trade deficit, it is considered to be unfair to the US.

India has blossomed into an emerging power and has surpassed China to become the fastest-growing economy in the world. With Modi winning the recent elections by a landslide, India has been given a confidence boost. In time, India may end up surpassing China in economic terms. However, the United States will not allow India to become a potential competitor in the long run.

It can be said that the United States canceling the concessions and exemptions for India has served as a warning for other developing countries. After the West suffered a great deal during the global economic crisis in 2008, it has changed its stance regarding developing countries such as India and China. For starters, the West does not want to recognize China’s market-economy status nor its status as a developing country. The cancellation of India’s status as a beneficiary of the United States’ the Generalized System of Preferences (GSP) will slow its development into a trading powerhouse. Modi’s dream of a “New India” may be put on hold by Trump’s cancellation of concessions.

However, India still hopes to resolve any trade dispute before the Group of Twenty summit in Osaka, Japan, this month. Under US pressure, India has already stopped importing oil from Iran as well.

While the effects of the cancellation of India’s GSP status may not be as intense as the restrictions imposed on China in the trade war, it is still a major setback. The key focus is the trade deficit that the United States will do whatever it takes to reverse.

This article was first published on and was translated by Kamaran Malik.

Zhang Jingwei

Zhang Jingwei is a senior researcher at the Charhar Institute as well as a researcher at the Chongyang Institute for financial studies at the Renmin University of China.

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