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The Hindu
2 days ago
- Business
- The Hindu
Resetting the India-U.S. partnership in uncertain times
Just a few months ago, India and the United States appeared poised to deepen what had been described as the defining partnership of the 21st century. Prime Minister Modi had met President Donald Trump early in his second term. External Affairs Minister S. Jaishankar was present at the inauguration. There was bipartisan goodwill in Washington and strategic optimism in New Delhi. The relationship seemed to rest not on convenience, but on a grander wager: shared democratic values, converging geopolitical interests, and a mutual ambition to shape the emerging world order. A drift that is serious Today, however, there is growing unease in New Delhi. Not a rupture, but a perceptible drift; subtle yet serious. A series of tactical and rhetorical signals from Washington suggest a partnership at risk of being undermined by volatility, policy incoherence, and a disconcerting return to older habits of mind. The sense of strategic convergence is dimming. In this context, Mr. Trump's decision to host a lunch on June 18 for Field Marshal Asim Munir, the chief architect of Pakistan's praetorian politics and sectarian rhetoric, has sent a disquieting signal to India, not least because it blurs the line between counter-terrorism partnership and political expediency. This drift, however, is not irreversible. The structural logic of the partnership remains robust. What is required now is a reset, not of fundamentals, but of tone, clarity, and mutual commitment. Several recent developments have triggered India's discomfort. Perhaps most jarring has been the return of outdated 'hyphenation': treating India and Pakistan as equivalent strategic concerns. In the aftermath of Operation Sindoor, Mr. Trump spoke of India and Pakistan in the same breath, offered mediation on Kashmir, and warned of nuclear escalation. For Indian policymakers who have invested years in decoupling India's rise from the India-Pakistan binary, such language was diplomatically regressive. On the economic front, signals have been equally disconcerting. Even as Mr. Trump announced that 'our deal with China is done', he reportedly discouraged Apple's CEO from expanding manufacturing in India; warning that companies that 'go to India' may face difficulties in accessing the U.S. market. For Indian officials advancing a 'China-plus-one' strategy and projecting India as a manufacturing hub, the message was undermining. Immigration policy, too, has become a point of friction. The H-1B visa regime, long a cornerstone of India-U.S. technological cooperation, now appears vulnerable to political posturing and protectionist rhetoric. The consequences risk fraying the connective tissue that binds Silicon Valley to Indian innovation ecosystems. Most concerning is the apparent warming in Washington's approach toward Pakistan. When the United States Central Command (CENTCOM) Commander, General Michael Kurilla, described Pakistan as a 'phenomenal partner' in counterterrorism, it represented an extraordinary characterisation of an institution long associated with nurturing cross-border terrorism. Why is this drift occurring? First, the Trump administration's transactional approach places short-term gain over long-term alignment. India's strategic culture — patient, layered, and civilisational — sits uncomfortably with Washington's preference for the quick deal. The American impulse to monetise diplomacy can often jar with India's more strategic-based lens on geopolitics. In addition, Mr. Trump's diplomatic style remains as intriguing as ever: part showman, part salesman, and unpredictable. He may dazzle one moment and denounce the next, making it difficult for partners, even the closest, to navigate the terrain of trust and expectation. Second, a segment of the U.S. national security establishment continues to view Pakistan as a familiar, if flawed, partner, especially in the context of Afghanistan and counterterrorism. Despite a history of duplicity, there remains a deep-seated nostalgia for the 'known devil', whose strategic utility, however diminished, is still overstated. Meanwhile, India's strategic autonomy is often misconstrued as fence-sitting rather than a principled assertion of sovereignty. Third, structural asymmetries in influence and communication persist. India's rise is real, but its institutional footprint in Washington lags behind its ambitions. This is reflected in a troubling misunderstanding of India's strategic intentions. Critics such as Ashley Tellis argue that India suffers from 'great-power delusions' and that the relationship falters because India's ambitions outstrip its capabilities. This diagnosis is flawed. India does not suffer from delusions of grandeur; it suffers from the patient weight of becoming. Its desire to chart an independent course reflects not confusion but strategic clarity shaped by history and sovereignty. The real risk lies not in India's aspirations but in Washington's impatience with partners who do not mirror American methods or priorities. India must take the lead What then must be done? Both countries must act decisively to prevent further drift. India should not overreact. Tactical irritants must not obscure deeper strategic alignment. Defence cooperation, Quad initiatives, intelligence sharing, and convergent interests from the Indian Ocean to the Pacific remain strong foundations. But dramatic responses will only exacerbate misunderstanding. Quiet, persistent, and calibrated diplomacy must remain the preferred method. India should broaden and deepen its engagement in Washington beyond traditional diplomacy, leveraging Congress, policy think tanks, and Indian American diaspora as vectors of strategic advocacy. Domestically, India must accelerate internal economic reforms, not to satisfy any foreign expectations but to reinforce the logic of investment, manufacturing, and long-term confidence. Regulatory clarity and infrastructure modernisation remain the best arguments for India as a global production hub. On the trade front, officials on both sides are cautiously exploring a modest but meaningful bilateral arrangement before the July 9 deadline. Immigration concerns must be reframed as shared opportunities. The H-1B regime is not a concession to India, but an instrument of mutual innovation. The movement of skilled talent, the collaborative ecosystems of tech entrepreneurship, and the potential for co-creating the next generation of frontier technologies should be at the centre of the India-U.S. conversation. The need to rediscover the basis of ties For the U.S., the burden is equally significant. Washington must abandon Cold War framings and recognise that treating Indian manufacturing and talent mobility as threats is self-defeating. If the Indo-Pacific strategy is to endure, it must be matched by concrete investments in India's regional capacity-building initiatives. More fundamentally, both countries must rediscover the moral purpose of their partnership. This is not merely about balancing China or accessing markets. At its best, the India-U.S. relationship is about shaping a democratic, pluralist, and rules-based world order. The arc of India-U.S. relations has never been linear. In 1998, after the Pokhran tests, who could have imagined the level of alignment achieved just a decade later? By 2005, the two countries had stunned the world with the landmark civil nuclear agreement: an audacious act of strategic trust that rewrote the rules of global diplomacy. That moment reminds us of what is possible when political courage meets mutual respect. As U.S. President Bush once said, 'The world will see what two great democracies can do when they trust each other.' It is precisely that spirit we must summon again today. As this writer wrote in the introduction to Engaged Democracies (co-edited, more than two decades ago), the 'real test of the partnership is not how it behaves in moments of celebration, but how it endures in times of stress'. The question then is not, as Walter Russell Mead provocatively asked recently, will Trump lose India? The better question is: will both countries squander a generational opportunity to build a democratic concert in Asia? The answer must be no. This turbulence should serve not as an epitaph, but as a summons to renewal. If clarity, commitment, and candour return to the conversation, the arc of the India-U.S. relationship can still bend — not just toward engagement, but toward enduring partnership and, perhaps once again, toward history-making trust. Amitabh Mattoo is Professor and Dean, School of International Studies, Jawaharlal Nehru University. He has served on India's National Security Council Advisory Board
Business Times
3 days ago
- Business
- Business Times
Singapore, Thailand may see negative growth by 2026 as Asean reels from tariffs: economists
[SINGAPORE] The full impact of the escalating US tariffs on Asean's growth will likely emerge in 2026 – when the region is expected to face a sharp slowdown. Bloomberg Economics projected on Tuesday (Jun 17) that gross domestic product growth across the Asean-5 economies – Singapore, Malaysia, the Philippines, Vietnam and Indonesia – is expected to fall from 4.5 per cent in 2024 to 3 per cent in 2025. The research unit added that growth could even fade to 1.5 per cent in 2026 if the tariffs stay in place. Among the five, Thailand and Singapore are likely to be hit the hardest because of their exposure to global trade, said Bloomberg's senior economist for South-east Asia Tamara Henderson. Thailand, the exports of which account for nearly 70 per cent of GDP, faces potential tariffs as high as 36 per cent. She warned that the country's growth is likely to slip below 2 per cent in 2025, and may contract outright in 2026 if the tariffs remain. 'Over 11 per cent of Thailand's GDP comes from merchandise exports to the US, particularly in electronics and chips,' she noted. 'Auto-supply chains are also affected, and tourism recovery has faltered.' A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Although Singapore faces the minimum 10 per cent baseline tariff, it is arguably the most exposed in the region because of its export-oriented economy. About 6 per cent of its GDP depends on exports to the US, with significant trade in semiconductors and pharmaceuticals, for which the likelihood of additional duties remains unclear. This could drag Singapore's 2025 growth sharply below the strong 4.4 per cent recorded in 2024. If the tariffs remain in force, Singapore's economy could contract by around 1 per cent in 2026, Henderson projected. 'Singapore is likely to take the largest hit to growth in the near-term from the tariff shock. However, its agile and well-resourced government may allow the city-state to emerge with less scarring over the medium term,' she added. Economies such as the Philippines and Indonesia are expected to weather the tariff storm better, given that their growth is more led by domestic demand. In Indonesia, US-bound shipments account for only around 10 per cent of exports. 'Exports in Indonesia are about 25 per cent of overall GDP, compared to household spending, which makes up around 50 per cent,' said Henderson. Likewise, the Philippines' tight labour market and strong household sector are likely to support domestic spending, shielding the country from heavy tariff shocks. She noted, however, that the tariffs could hit both economies in areas beyond trade, given that weak global demand and weaker pricing power along supply chains could dampen the region's investment and hiring opportunities. Balancing acts Heavy US tariffs on South-east Asian economies mean that the region's attractiveness as an alternative 'China-plus-one' destination is slowly fading. Asean countries must therefore find new opportunities to remain resilient, said Priyanka Kishore, lead economist at the policy consultancy Asia Decoded; she was speaking at the launch of a report on the region's economic outlook by the Institute of Chartered Accountants in England and Wales on Jun 12. China's role in the changing global order will be difficult to navigate, she said, because its improvements in manufacturing could be damaging to the region's economies, even as it offers an alternative trade destination to the US. She noted that the region's labour productivity has lagged at half the pace of China's in recent years. 'China is capital-intensive and mechanised; it is producing items at a fraction of the cost of that in a factory in Indonesia. 'Regional cooperation will have to include reform in infrastructure and human capital development, such as training of skills and digitalisation,' she said. Henderson added that Asean's resilience will depend on identifying new competitive niches. 'Finding these gaps will be the challenge. Perhaps, these will be in services. Countries such as Singapore, with its many Mandarin speakers, could see an advantage in its ability to understand both the West and China,' she suggested. But China's place in the Asean story is not entirely damaging, analysts say. The Chinese government's efforts to boost its ailing economy have been widespread, and aimed at making domestic demand the main engine and anchor of its economic growth. If successful, a wealthier Chinese middle class could spark opportunities in trade and investment for certain sectors in the region. Gary Tan, portfolio manager at Allspring Global Investments, said: 'These include tourism, logistics and e-commerce; regional hubs like Singapore could see increased cross-border activity.'
Business Times
4 days ago
- Business
- Business Times
Singapore, Thailand may see negative growth by 2026 as Asean reels from tariffs: Bloomberg
[SINGAPORE] The full impact of the escalating US tariffs on Asean's growth will likely emerge in 2026 – and Bloomberg projects a sharp regional slowdown. Gross domestic product growth across the Asean-5 economies – Singapore, Malaysia, the Philippines, Vietnam and Indonesia – is expected to fall from 4.5 per cent in 2024 to 3 per cent in 2025; Bloomberg Economics projected on Tuesday (Jun 17) that growth could even wilt to 1.5 per cent in 2026 if the tariffs stay in place. Among the five, Thailand and Singapore are likely to be hit the hardest because of their exposure to global trade, said Bloomberg's senior economist for South-east Asia Tamara Henderson. Thailand, the exports of which account for nearly 70 per cent of GDP, faces potential tariffs as high as 36 per cent. She warned that the country's growth is likely to slip below 2 per cent in 2025, and may contract outright in 2026 if the tariffs remain. 'Over 11 per cent of Thailand's GDP comes from merchandise exports to the US, particularly in electronics and chips,' she noted. 'Auto-supply chains are also affected, and tourism recovery has faltered.' Although Singapore faces the minimum 10 per cent baseline tariff, it is arguably the most exposed in the region because of its export-oriented economy. About 6 per cent of its GDP depends on exports to the US, with significant trade in semiconductors and pharmaceuticals, for which the likelihood of additional duties remains unclear. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up This could drag Singapore's 2025 growth sharply below the strong 4.4 per cent recorded in 2024. If the tariffs remain in force, Singapore's economy could contract by around 1 per cent in 2026, Henderson projected. 'Singapore is likely to take the largest hit to growth in the near-term from the tariff shock. However, its agile and well-resourced government may allow the city-state to emerge with less scarring over the medium-term,' she added. Economies such as the Philippines and Indonesia are expected to weather the tariff storm better, given that their growth is more led by domestic demand. In Indonesia, US-bound shipments account for only around 10 per cent of exports. 'Exports in Indonesia are about 25 per cent of overall GDP, compared to household spending, which makes up around 50 per cent,' said Henderson. Likewise, the Philippines' tight labour market and strong household sector are likely to support domestic spending, shielding the country from heavy tariff shocks. She noted, however, that the tariffs could hit both economies in areas beyond trade, given that weak global demand and weaker pricing power along supply chains could dampen the region's investment and hiring opportunities. Balancing acts Heavy US tariffs on South-east Asian economies mean that the region's attractiveness as an alternative 'China-plus-one' destination is slowly fading. Asean countries must therefore find new opportunities to remain resilient, said Priyanka Kishore, lead economist at the policy consultancy Asia Decoded; she was speaking at the launch of a report on the region's economic outlook by the Institute of Chartered Accountants in England and Wales on Jun 12. China's role in the changing global order will be difficult to navigate, she said, because its improvements in manufacturing could be damaging to the region's economies, even as it offers an alternative trade destination to the US. She noted that the region's labour productivity has lagged at half the pace of China's in recent years. 'China is capital-intensive and mechanised; it is producing items at a fraction of the cost of that in a factory in Indonesia. 'Regional cooperation will have to include reform in infrastructure and human capital development, such as training of skills and digitalisation,' she said. Henderson added that Asean's resilience will depend on identifying new competitive niches. 'Finding these gaps will be the challenge. Perhaps these will be in services. Countries such as Singapore, with its many Mandarin speakers, could see an advantage in its ability to understand both the West and China,' she suggested. But China's place in the Asean story is not entirely damaging, analysts say. The Chinese government's efforts to boost its ailing economy have been widespread, and aimed at making domestic demand the main engine and anchor of its economic growth. If successful, a wealthier Chinese middle class could spark opportunities in trade and investment for certain sectors in the region. Gary Tan, portfolio manager at Allspring Global Investments, said: 'These include tourism, logistics and e-commerce; regional hubs like Singapore could see increased cross-border activity.'
Business Times
18-05-2025
- Business
- Business Times
Trump's tariff tide lifts Asean ports again – some more than others
[SINGAPORE] Ports across South-east Asia are riding a second wave of a 'great reroute', buoyed by a fresh swell as businesses give Beijing a wide berth to dodge US tariffs – adding to earlier gains when companies adopted the China-plus-one playbook. US President Donald Trump's latest tariff blitz, albeit dialled-back temporarily, has sent businesses rerouting their shipments, with pundits The Business Times spoke to agreeing that ongoing supply chain shifts are putting wind in the sails of South-east Asia's ports – the backbone of global trade. But the region's rising shipping volumes are straining ports, with infrastructure gaps and pandemic-era congestion resurfacing as shippers rush to beat the tariff clock. S&P Global Ratings analyst Yang Shanshan noted that since the tariffs were introduced, the China-US throughput has naturally faced the largest drops, while the largest boost was seen on routes between China and South-east Asia. Ports in Vietnam, India and Malaysia are clear beneficiaries, recording double-digit volume growth, said Praveen Gregory, senior vice-president for ocean freight at DHL Global Forwarding Asia Pacific. 'Smaller ports like Thailand's Laem Chabang are also gaining traction for niche sectors like automotive parts,' he highlighted. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Earlier, the US slapped on China goods an overall tariff of 145 per cent, which has since been cut to 30 per cent after a trade deal was brokered from weekend trade talks in Geneva. South-east Asia earlier faced levies ranging from a baseline 10 per cent to as high as 49 per cent, until Trump on Apr 9 announced a 90-day pause on these reciprocal taxes. While some companies adopted a wait-and-see approach by utilising existing inventory to meet demand or frontloaded orders to ensure sufficient stock on hand, others are changing their sourcing networks where possible, in the short term, added Gregory. 'This can be seen from the surge in demand for alternative sourcing hubs like Vietnam, India and Mexico,' he noted. 'We have also seen an increase in transhipment through South-east Asian hubs like Malaysia.' Despite an additional one to three days in transit times, companies are still pivoting to such regional transhipment hubs as they hunt for alternatives to bypass direct China-US routes, said DHL's Gregory. Similarly, Flexport's vice-president for global ocean procurement Nerijus Poskus pointed out that the tech-focused logistics management firm is seeing a 'notable increase' in requests for quotations originating from Vietnam, Cambodia, Indonesia, Malaysia and Thailand. 'Haiphong is experiencing an increase in direct service offerings, particularly on Transpacific routes,' he said of the Northern Vietnamese port city. Transpacific Eastbound trade lane Poskus added that the wider China's market share of US imports along the Transpacific Eastbound (TPEB) route – a trade lane that stretches across the Pacific Ocean between Asia and the US, and arguably the most important to American importers – has gradually been declining. The market share of China, Hong Kong and Taiwan combined fell to 61.7 per cent in the year to date, from 62.8 per cent last year and 74.6 per cent in 2016, he said. Meanwhile, Vietnam's share of the TPEB market grew to 15 per cent this year from 6.2 per cent in 2016. Poskus noted that Vietnam has more than doubled its share to become the second-largest source of US imports. Thailand's market share increased to 5.5 per cent this year so far from 3.1 per cent in 2016, he added. Indonesia also achieved 'modest growth' to 2.9 per cent in the year to date from 2.4 per cent in 2016, and Flexport has recently received 'a lot of interest' in the largest South-east Asian economy, said Poskus. Congested ports But increased throughput comes with a price tag for the region, and its perennial struggle with infrastructure financing gaps is coming back to bite. South-east Asia is experiencing a level of port congestion not seen since the pandemic, said Lockton Singapore's head of protection and indemnity, Freddie Hawke. 'In Thailand, Indonesia and Vietnam, we're seeing a surge to expedite cargo within the 90-day implementation window (and) we expect to see further congestion for ports in this region as importers look for alternatives to Chinese suppliers,' he noted. Said DHL's Gregory: 'Infrastructure gaps remain a challenge (for regional ports), and congestion resurges where capacity lags demand.' The global story Observers across the board maintain that the outlook for the shipping industry remains murky, with much hinging on the trajectory of trade and tariff policies in the coming months. The shipping industry is often seen as a proxy for global economic growth, and freight rates are viewed as a barometer of the sector's health. Jayendu Krishna, director – head of maritime advisers at Drewry, noted that freight rates from Malaysia and Vietnam to the US have 'increased considerably, (which) is reflective of surging volumes'. Then again, that of other major US-bound routes have been falling, he added. 'It tells a global story of a steep decline in freight rates, mainly because of oversupply in the container shipping market,' warned Krishna. 'With a fall in US-bound trade, container shipping may be facing a double whammy.'
Indian Express
15-05-2025
- Business
- Indian Express
As Beijing, Washington dial down, Piyush Goyal to lead team for US trade talks
A 'large Indian trade' delegation led by Union Commerce Minister Piyush Goyal is set to visit the US for talks next week to potentially finalise the contours of an interim trade agreement between the two countries, a senior government official said Thursday. The fresh round of trade talks with the US assumes significance as it follows the conclusion of a surprise US-China trade deal that saw substantial reductions in the 'tit-for-tat' tariffs. 'The deal has only resulted in a de-escalation of tensions. But substantial tariffs on China remain. India is focusing on its competitiveness,' an official said in response to a question on the impact of the US-China deal on India. On the recent action by India to propose retaliatory tariffs against the 25 per cent US duties on steel and aluminium at WTO, the official said that India aimed to reserve the right to retaliate even as negotiations with the US were ongoing. Another official explained that India needed to approach the WTO within 90 days of the US tariffs to retain its right to retaliate. Notably, Indian steel exporters had told the government that US tariffs have impacted nearly $5-billion worth of exports. The thaw in US-China tension, which came as a surprise to many in trade policy circles, is seen as a setback for 'China-plus-one' countries — such as India — which may now see fewer benefits from a trade deal with the US than previously anticipated. Though New Delhi initiated trade talks with Washington DC earlier than Beijing, China quickly resolved key sticking points with the US and sealed an interim deal. Earlier on Thursday, US President Donald Trump claimed that India had 'offered to drop all tariffs' on the US during negotiations. However, External Affairs Minister S Jaishankar said that any trade deal must be mutually beneficial. 'A trade deal has to work for both countries. That would be our expectation from any trade deal. Until that is done, any judgment will be premature,' Jaishankar said at the opening of Honduran embassy in New Delhi. Speaking at a business leaders' forum in Doha earlier in the day, Trump had said, 'It is very hard to sell in India… they are offering a deal… willing to literally charge us no tariffs.' The Indian Express had reported that US demands during the negotiations centred on greater market access, particularly for automobiles, whisky, and certain agricultural products. Indian negotiators, meanwhile, sought improved access for labour-intensive sectors such as textiles and leather. On digital trade, the US is pushing for greater data access and is challenging India's strict data localisation rules, which require Indian data to be stored domestically. During Trump's first term, disputes over data localisation were a major source of friction between the two nations. Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, covering policy issues related to trade, commerce, and banking. He has over five years of experience and has previously worked with Mint, CNBC-TV18, and other news outlets. ... Read More
