India, U.S. navigate trade tensions

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LINDSAY MAST, HOST: Up next, making a deal with India.

President Trump has so far negotiated trade deals with seven nations including Vietnam and the United Kingdom, and a temporary trade truce with China.

MYRNA BROWN, HOST: One deal that remains out of reach so far is with India. Commerce Secretary Howard Lutnick laid out U.S. priorities on CNBC earlier this month:

LUTNICK: You know India has to basically open their market, has to stop buying Russian oil. You know, people don’t remember that India didn’t buy Russian oil before the war with Russia and Ukraine.

MAST: In recent years, India has become Russia’s second largest customer for oil, taking advantage of lower prices during the Ukraine war. Hoover Institution Senior Fellow Sumit Ganguly says until recently, the U.S. permitted that arrangement.

GANGULY: The relationship really has taken a body blow in the last few weeks and months, largely because of the imposition of the initial 25% tariffs and followed by an additional 25%.

MAST: President Trump announced in August that new sanctions on Russia’s trading partners would go into effect. China was not on the list, but India was.

GANGULY: It's wreaking havoc on certain industries in India, from jewelry to textiles to the production of auto parts for American manufacturers of automobiles.

BROWN: Ganguly told Washington Producer Harrison Watters that Russian oil is only part of the conflict. Earlier this summer, President Trump and Prime Minister Narendra Modi had a falling out. Trump claimed to be the decisive negotiator in a ceasefire between India and Pakistan.

GANGULY: He may have played some marginal role in this, but hardly a critical role or a catalytic role. But Modi, I thought, was rather inept in terms of the diplomatic dealings with Trump.

MAST: Prime Minister Modi refused to return Trump’s calls, leading to a breakdown in trade talks.

Then earlier this month, Prime Minister Modi met with Chinese President Xi Jinping and Russian President Vladimir Putin. That caused some to wonder if India would shift away from the United States on trade. But in a followup interview, Ganguly says pressure at home has since pushed India to return to the bargaining table.

GANGULY: I think they're willing to put almost anything on the table, barring one issue, and that is agriculture.

BROWN: India has high tariffs to protect its dairy industry in particular. On products like California pistachios, Ganguly says they are willing to talk. But one American product has become an awkward sticking point. Commerce Secretary Lutnick has complained that India’s massive population is not buying American corn. Ganguly says demand rather than tariffs may be the primary obstacle.

GANGULY: Why would Indians buy corn from the United States when they don't consume corn in large amounts?

MAST: India has increased its production of plant-based fuel in recent years, but uses domestic sugarcane and grains rather than American corn. India’s commerce secretary met with Lutnick on Monday, and both sides reported positive developments, though Ganguly says there’s still work to be done.

GANGULY: The most important thing is to see if both sides can find a compromise. And quite frankly, the ball is in the American court. If Lutnick keeps making these absurd demands… the Indians are going to walk away, to our detriment.

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