India ready to buy oil, ethanol, corn and maize from the United States: Reports

A Bilateral Trade Deal between India and the US is imminent, reported The Mint on 22 October, and the announcement can come as early as in the next 7-10 days when PM Modi travels to Malayasia to attend the ASEAN and the East Asia summit.

While official confirmation of the visit of PM Modi and the US president Donald Trump is still awaited, the buzz is that the United States is now desperate to seal a deal with India.

This has to do with China imposing export controls on 9 October on rare earth minerals and magnets among other things. China has also hardened its position on a trade deal with the US and is seen doing everything to put the US in a corner.

The hawks in the US like Peter Navarre, Howard Lutnick and Scott Bessant, who till recently were talking about ‘fixing’ India have gone silent.

PM Modi and President Trump are believed to have spoken directly to each other on three occasions in recent weeks while exchanging birthday greetings, Modi lauding the US president for the Gaza peace deal and the US president extending Diwali greetings to Modi.

The US ambassador-designate Sergio Gor’s unscheduled visit to New Delhi and meeting with the Indian PM even more presenting his credentials and taking up residence in New Delhi was designed to accelerate the trade talks, say sources.

India is hoping that the deal would reduce tariff for exporting goods to the US from the current level of 50 per cent to 15-16 per cent. Half the current tariff, 25 per cent, is levied for buying Russian oil. With the US president insisting on India to stop buying Russian oil, reports confirms that Indian oil PSUs have all but stopped buying oil from Russia.

This is what the US president had said at a media briefing that Pm Modi had assured that India would stop buying oil from Russia. With oil prices declining steadily to $58 a barrel this week, Indian private refiners still buying Russian oil are making more modest profit as the gap between price of Russian oil and the benchmark price has reduced. The price of oil has also plunged after OPEC countries including Saudi Arabia having increased production substantially.

Trump reveals, Modi conceals: Congress on US President repeating Russian oil claims

As part of the trade deal, reports suggest, India has agreed to buy more oil and ethanol from the US besides opening up its market to non-genetically-modified soybean, maize and corn from the US. With China buying only a token volume of soyabean and soy meal from the US, the US president is said to be desperate to find an alternative market.

India seems to be ready to oblige.

Reports suggest that Indian officials have informed Russia about reduced purchase of Russian oil at discounted prices.      

While the United States has hurriedly signed a deal with Australia for the supply of rare earth minerals so as to reduce its dependence on China, experts believe it would take 10-15 years for new supply chains to stabilise. Beijing tightened export controls over these strategic materials used in hi-tech products from blenders to fighter jets on 9 October, triggering global shock waves.

The controls, most experts believe, are here to stay and are “not likely to be reversed by grins and handshakes”.

“Xi is going on the offensive,” Jonathan Czin, a Brookings fellow and former China expert at the CIA was quoted as saying in the South China Morning Post. “This was a strategic move. It wasn’t just a tactical move that was focused on the next round of meetings,” he said.

“Beijing still very much wants a trade deal with Washington even if it doesn’t have deep expectations that a new trade deal with the US will fundamentally improve the bilateral relationship” to try to reduce tariffs, keep anti-China trade hawks at bay and introduce a modicum of stability, said Patricia Kim, a Brookings fellow.

An opinion piece in the Wall Street Journal on 21 October acknowledged that Indian public opinion has turned sharply against the once-popular US president, partly because of the Trump administration’s perceived tilt towards Pakistan.

Two White House visits by Pakistan’s army chief Asim Munir, the second including Pakistani prime minister Shehbaz Sharif, sent shock waves across India and left many Indians feeling stunned and betrayed. India has retaliated by announcing closer relations with the once-hated Taliban on the premise that the enemy of my enemy is my friend.

However, the WSJ noted that India’s political and business leaders, deeply invested in the US, still want to work with the US. With China buying oil from both Russia and Iran, boycotting American soybean exports, and restricting its exports of rare earths and other critical materials, mending and deepening ties with India is seen in Washington as a push-back, the WSJ explains.

Trump ignores MEA denial as US president repeats Russian oil import claims: Congress