US policy shift towards India an 'Unfortunate Turn': Kaushik Basu

Former World Bank Chief Economist Kaushik Basu has raised concern about the latest shift in the United States’ economic policy towards India, calling it an “unfortunate turn” and warning of negative consequences, particularly for India's agriculture sector. Basu’s remarks come in response to US President Donald Trump’s recent announcement of a 25% tariff on Indian imports starting August 1. The tariff move is being seen as a sign of growing tensions between Washington and New Delhi amid stalled trade negotiations.
Basu questioned the rationale behind the US decision, stating that while America complains of a trade deficit with India, the gap—currently around $41 billion—is relatively minor when compared to the US deficits with China ($270 billion) or even Vietnam ($113 billion). "The US now takes India for granted as never before," Basu noted, adding that India was once known for maintaining an independent voice on global matters.
The economist, currently teaching at Cornell University, further expressed concern that the US is targeting India’s sensitive agriculture and dairy sectors as part of its trade demands. “If India gives in to US demands and does a deal on those terms, it will have a negative impact on Indian farmers and the broader agricultural economy,” he said.
He also drew attention to the current crisis in India’s farm sector, including a surge in surplus labour and declining incomes, urging both countries to handle the ongoing negotiations with greater care and empathy.
President Trump justified the tariffs by citing India's "high tariffs," "obnoxious non-monetary trade barriers," and strong trade ties with Russia. He claimed India continues to purchase the majority of its military equipment and energy from Russia—even as the West pushes to isolate Moscow over the Ukraine conflict.
The announcement has raise concern among trade observers. A delegation from the United States is expected to visit India next month for the next round of discussions on the proposed bilateral trade agreement. Last week, the fifth round of talks was concluded in Washington, led by India’s chief negotiator and Special Secretary in the Department of Commerce Rajesh Agrawal and his US counterpart Brendan Lynch.

(Business Correspondent)