Donald Trump, the president of the United States of America, announced on Monday a trade deal with India under which the US will slash tariffs on Indian goods from 50% to 18%. Prime Minister Narendra Modi reciprocated with an affirmative tweet. Both governments have hailed the announcement that was made after a phone call between Mr Modi and Mr Trump. India’s stock markets surged on Tuesday in response to the news of a thaw in the tensions that have roiled trade between India and its biggest export market for months. Those market indices reflect the broader hope that the India-US relationship can now move from the choppiest terrain it has suffered in decades to a calmer place. The optimism is justified; but a dose of caution is merited too. Mr Trump is perhaps America’s most unpredictable leader in modern history: India knows it needs to weigh his words, whether on India-Pakistan tensions or a trade deal. Moreover, the details of the deal are yet to be spelled out clearly.
In fact, there are numerous prickly issues that the trade deal would need to overcome. Mr Trump claimed that Mr Modi had committed to not buying any more Russian oil. New Delhi is yet to publicly confirm this claim. Mr Trump also asserted that India would lower tariffs and other barriers to zero for American goods. While India might have agreed to remove some tariffs, it is hard to imagine New Delhi agreeing to a blanket end to all duties on US products — especially in agriculture. Mindful of the political implications, five months ago, Mr Modi had promised he would defend the interests of Indian farmers. The Union commerce minister has now stated that sensitive sectors such as dairy and agriculture remain protected in the deal. Yet on Monday, Mr Trump’s agriculture secretary claimed US farm products would now have greater access to India. Every trade negotiation involves a compromise. India was never going to get everything it wanted. But until it is clear what both sides have gained and lost, it would be premature to accept either the government’s claims of a win or the Opposition’s accusations that Mr Modi has betrayed Indian interests.