Market expert Ajay Bagga has issued a stark warning against the proposed India-US trade deal, highlighting significant economic risks for India. In an exclusive interaction with NDTV Profit on January 12, Bagga outlined potential adverse impacts on the Indian economy, particularly concerning job losses in key manufacturing sectors.

Trade Deal Unlikely to Materialise

Bagga expressed scepticism about the prospects of an India-US trade agreement, stating he does not foresee the deal happening in the near term. The expert believes there is no requirement at the US end to push through the agreement, noting "They're making an example out of India."

While Bagga suggested that the 25% excess punitive tariff on India could potentially be removed in case of a Russia-Ukraine peace deal, he remained pessimistic about bilateral negotiations between India and the US.

Major Economic Risks Identified

The market expert highlighted several sectors that could face significant challenges:

Bagga emphasised that while manufacturing sectors face immediate risks, the bigger concern lies with India's service exports, which could experience more substantial negative effects.

Alternative Approach Suggested

Despite his concerns about a comprehensive trade deal, Bagga recommended that India should work towards "some kind of a transient agreement, even if a trade deal doesn't happen." However, he expressed doubts about any movement on this front, describing the current Trump administration as "very aggressive" following the Venezuelan crisis.

Government Response and Stance

Union Commerce Minister Piyush Goyal recently urged for trust in India's approach to trade negotiations. Speaking at NDTV Power Play, Goyal responded to US Commerce Secretary Howard Lutnick's comments about failed negotiations with India, stating "Trust your country, your motherland, not foreign statements." This came after the Ministry of External Affairs firmly rejected speculation that the trade agreement failed due to Prime Minister Narendra Modi not placing a phone call to US President Donald Trump.

Concerns Over Federal Reserve Investigation

Bagga also expressed disappointment regarding the criminal investigation launched against US Federal Reserve Governor Jerome Powell, calling it a "huge disappointment." He noted that having a criminal investigation against a sitting central bank governor, with Powell characterising it as a political decision, is particularly concerning for market stability.

Powell responded to the development through a formal Fed statement, emphasising that "The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President."

Market and Geopolitical Implications

The expert anticipates potential market reactions similar to previous instances when markets showed disappointment with policy decisions. Bagga also commented on potential US military action against Iran, suggesting that while such action "seems to be on the anvil," it would require significant military preparation and face substantial challenges given Iran's well-armed status and Russian support.

Source: https://www.ndtvprofit.com/economy-finance/more-job-losses-ajay-baggas-stern-warning-against-trade-deal-with-us-eyes-a-big-risk-for-india

New US Ambassador to India Sergio Gor has announced the resumption of trade negotiations between India and the United States, with the next call scheduled for tomorrow. The announcement comes as Gor assumes his diplomatic role with the clear objective of taking the India-US partnership to unprecedented levels.

Trade Deal Negotiations Resume

Gor emphasized the critical importance of reaching a trade agreement with India, describing it as the most essential partnership for the United States. The Ambassador highlighted the transformative potential of this collaboration, stating that the partnership "could be the most consequential global partnership of this century." He acknowledged the challenges both nations have faced in previous negotiations, noting that while "it is not an easy task to get across the finish line," both countries remain determined to achieve success.

India Invited to Join Pax Silica Initiative

In a significant strategic development, Gor announced that India will be invited to join Pax Silica as a full member next month. This US-led strategic initiative focuses on silicon and AI supply chains and currently involves key allies including Japan and South Korea. The inclusion represents a major milestone for India's semiconductor ambitions and strategic technology partnerships.

Presidential Messages and Future Visits

The Ambassador conveyed personal messages from President Donald Trump, referencing the President's positive memories of his previous visit to India and his strong relationship with Prime Minister Narendra Modi. Gor expressed optimism about a potential presidential visit to India within the "next year or two," further underlining the commitment to strengthening bilateral ties.

Diplomatic Vision

Gor characterized his tenure as a "once in a lifetime opportunity to redefine diplomacy," positioning the India-US relationship as a historic convergence at the "intersection between the world's oldest democracy and the world's largest democracy." This framing underscores the Ambassador's vision for transforming diplomatic engagement between the two nations.

The developments signal a renewed momentum in India-US relations, with both trade negotiations and strategic technology partnerships taking center stage in the diplomatic agenda.