There’s “no question” India needs to cut its high tariffs in order to compete with more business-friendly rivals in Southeast Asia if it wants to win from Donald Trump’s looming trade war with China, the outgoing US ambassador to India said.
While Indian manufacturers stand to benefit if Trump’s tariffs force US firms to reduce trade with China, India needs to do much more to improve its domestic business environment to lure investment, Ambassador Eric Garcetti said in an interview in New Delhi on Thursday. Reducing high tariffs is a key step, he said.
“American companies don’t need India,” he said Thursday. “There’s a great market here if they want to be in the marketplace, but for their international exports, they don’t have to be in India. It’s oftentimes easier in Southeast Asia and Mexico.”
Trump returns to office next week with threats to slap universal tariffs on imports into the US, including at least 60% duties on Chinese goods. Even though India’s Prime Minister Narendra Modi has warm personal ties with Trump, the US president-elect has still warned the South Asian nation of reciprocal action if it keeps levies on American goods high.
The US has strengthened trade and diplomatic links with New Delhi in recent years under both Republican and Democratic administrations, as it sees India as a regional bulwark against a more assertive China.
‘Indispensable’ India
Despite Trump’s complaints about India’s trade barriers, Garcetti said he expects the US and India to continue to draw closer, noting that key figures such as incoming National Security Adviser Mike Waltz and Secretary of State nominee Marco Rubio have long been proponents of friendlier ties with New Delhi.
“You couldn’t get two more India-focused friends and China hawks,” the ambassador said. “A generation ago, the relationship we now have between the US and India would have been unimaginable, and I think a generation from now it’s going to be seen globally as absolutely indispensable.”
Garcetti, a former mayor of Los Angeles, wraps up an almost two-year stint as ambassador to India with Trump’s arrival in the White House next week. The president-elect has yet to announce his choice for a successor in New Delhi.
Under President Joe Biden, the US has pushed for greater cooperation in defense, technology sharing and business investment in India, with companies such as Apple Inc. boosting production in the country as they seek to diversify away from China. Others like chipmaker Micron Technology Inc. have also pledged increased investment.
Despite some wins under Modi’s signature “Make In India” campaign, the share of manufacturing in the country’s gross domestic product has slumped over the last decade. India faces stiff competition for foreign investment from Asian rivals such as Vietnam, which companies say provide a more business-friendly environment.
Murder Plot
A sticking point in the US-India relationship has been allegations made by US prosecutors in 2023 that an Indian government agent was involved in a foiled plot to assassinate a Sikh activist in America. India’s government set up a committee to investigate the claims, and earlier this week the panel recommended legal action against an unidentified individual.
Garcetti said the committee’s recommendation was “a welcome first step,” but said it should not be “the end destination” of New Delhi’s investigation.
“There needs to be systemic reform and there needs to be accountability,” he said. “Countries who are friends” cannot take “unlawful actions against others, let alone a murder for hire.”
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