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India: Seeking Expanded Trade Ties with West?

India, whose trade barriers have long been some of the highest among major world economies, may be “pivoting westward” when it comes to international commerce, according to The Wall Street Journal (subscription). 

What’s going on: “[W]hile keeping its [most favored nation] tariffs high, India since 2021 has embarked on a series of negotiations to reduce tariffs, quotas and other barriers with selected partners,” including, most recently, the United Arab Emirates and Australia.

  • India is also in advanced trade agreement negotiations with the United Kingdom, Canada and the European Union.
  • India’s high MFN “‘tariffs are not meant to be a detriment, ideally, to … Europe or America or Canada or Japan or Korea,’” Indian Minister of Commerce and Industry Piyush Goyal told the Journal. “‘We are looking at having more trading relationships, bilaterally or collectively, with the developed world with whom we want more and more open borders.’”

Why it’s important: India is seeking to position itself on the world stage as a sizeable potential market and trusted democratic partner that, unlike China, does not force foreign firms to share their technology or ownership with its own companies, according to the Journal. And this comes as India–China tensions have risen in recent years and as many companies are looking to diversify supply chains out of China.

But, but, but … Significant questions remain as to whether India’s pivot is rhetorical or actual.

  • The seeming push toward the West “needs to be judged relative to India’s traditions, in which nonalignment and protectionism were virtually hard-wired.”
  • India has long been skeptical of free trade deals, choosing not to join the trade pillar of the U.S.-led Indo-Pacific Economic Framework and withdrawing from negotiations for the Asia-based Regional Comprehensive Economic Partnership.

Worth noting: The U.S.–India trade relationship has grown significantly in recent years with stronger interest from both sides in finding ways to deepen the relationship. Yet, the two sides have struggled to resolve a series of tariff and nontariff barriers facing U.S. manufacturers in the India market.

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