Cong Flags Concerns As India & US Negotiate Trade Deal

The Congress party has issued a cautionary note regarding India’s ongoing trade negotiations with the United States, urging the government to avoid hasty agreements that could compromise critical sectors, particularly agriculture. On July 14, Congress general secretary in-charge of communications, Jairam Ramesh, emphasized the need for caution, warning against what he termed MASALA deals—an acronym for “Mutually Agreed Settlements Achieved through Leveraged Arm-twisting.”

Ramesh pointed out the historical context of MASALA bonds, which are issued by companies outside India but denominated in Indian rupees. He noted that the International Finance Corporation issued such bonds in 2014 and 2015, followed by HDFC and NTPC a year later. He referenced a recent warning from the New Delhi-based Global Trade Research Institute (GTRI) regarding the trade deal being negotiated with the US, stating, “Given the totally arbitrary and frankly bizarre manner in which President Trump functions, GTRI has now drawn attention to what it calls MASALA deals.”

Ramesh criticized the prime minister’s penchant for catchy acronyms, suggesting that while the language may be colorful, the underlying warning is serious. He remarked, “In our desire to curry favour, we have to be very, very careful.” He highlighted President Trump’s frequent references to MASALA, noting that he has mentioned it 21 times since May 10 in relation to Operation Sindoor, which was abruptly halted.

Experts have echoed Ramesh’s concerns, advising India to proceed cautiously in its trade negotiations with the US. They argue that the US has not hesitated to impose tariffs on even its closest allies, such as the European Union (EU). The US has recently sent letters to 24 countries, imposing tariffs as high as 50 percent on Brazil and proposing 30 percent duties on key trading partners like the EU and Mexico, effective from August 1.

GTRI founder Ajay Srivastava emphasized that India must recognize it is not alone in facing US pressure. He stated, “The US is currently negotiating with over 20 countries and seeking concessions from more than 90.” Despite this, many countries are resisting what they perceive as politically driven, transactional demands that offer no lasting trade certainty. “Most are resisting because they see these MASALA deals for what they are,” Srivastava added.

He further explained that while the EU and Mexico are significant trade partners for the US, India cannot expect a balanced deal under the current circumstances. Another trade expert echoed this sentiment, advising India to tread carefully in its negotiations. The GTRI highlighted that countries from Japan and South Korea to the EU and Australia are pushing back against Trump’s trade deals, which often demand tariff cuts without reciprocal concessions from the US, mandate guaranteed purchases of American goods, and leave the door open for future tariffs even after a deal is signed.

As India prepares for further discussions on the proposed Bilateral Trade Agreement (BTA), a team of Indian trade negotiators is set to visit Washington soon. Srivastava cautioned, “India should stay the course and avoid trading away core sectors like agriculture. A hasty deal under pressure could have irreversible consequences, especially when such agreements may not survive the next shift in US politics.”

The Congress party and trade experts’ exhortation to the Indian government to approach the trade negotiations with the US with caution emphasizes the potential risks of entering into MASALA deals that could undermine the country’s agricultural sector and overall trade stability.