New Delhi: Going by newspaper reports, a suicidal tendency appears to have seized a section of the Indian establishment. Stung by the US decision to remove India from the Generalized System of Preferences (GSP) which allowed duty-free exports of $5.6 billion worth of Indian goods to the United States, New Delhi apparently is contemplating establishing an alternate trading system with China and Russia which separately are targets of Washington’s tariffs or sanctions. This could be discussed at the earliest heads of governments’ meeting of India, China and Russia and it portends disaster if true.

At a nominal GDP of $2.61 trillion (PPP: $9.45 trillion), India ranks sixth in the world after the United States, China, Japan, Germany and the United Kingdom. The UK is $.01 trillion ahead of India. GSP is meant to benefit “developing countries”. India is a developing country but how many developing countries also rank sixth in the world by GDP? India may soon displace the UK at fifth spot or at least that is the propaganda. When the United States first gave notice of dropping India from GSP, commerce ministry officials shrugged it off saying India could live with it. How has it suddenly become a life-and-death issue?

Exports in excess of five-and-a-half billion dollars to the United States are not to be sneezed at when the flailing Indian economy desperately requires the addition of every single rupee in foreign earnings. Provisional estimates for the financial year released earlier this month show a mere 5.8 percent growth in the fourth quarter which is a twenty-quarter low and a cause for the annual growth decline to 6.8 per cent. In a situation of contraction, India needs all the help it can get. It is scarcely in a position to challenge the Donald Trump administration with a trade war with such dodgy partners as Russia and China.

The United States’ decision to cut off India from GSP came in retaliation to India’s counter tariffs to US ones on steel and aluminium. The US tariffs were principally directed at the European Union, Mexico and Canada, and its chief trade rival today, China, was down at the eighth tariff spot on the steel list. India was nowhere that high. Nevertheless, instead of conciliatory gestures, India imposed counter tariffs on $240 million of US imports without actually bringing them into effect. Why make a threat when it cannot be enforced? Canada and Mexico hurriedly settled with the United States and the EU won reprieve with a personal appeal to Trump. What’s prevented India from talking extensively on trade with the United States? Delay and procrastination have lead to a situation where Trump never misses calling India “tariff king” while the US secretary of commerce, Wilbur Ross, on a visit, says in public to the effect that any exception made for India is over.

Joining forces with China and Russia won’t help. It will make matters worse. It would a decision infinitely more calamitous than demonetization. On its own, the Russian economy is one of the least attractive to align with. In GDP ranking, it stands twelfth after Brazil, Italy and the rest. It is predominantly a commodity economy characterized by periods of booms and busts (the nineties, 2008-9 and 2014). It has never been able to shake off its Soviet war economy features with a bias towards defence manufactures which are only profitable with a large number of unsanctionable foreign clients. Russia depends more than it cares on China whose economic success hurts Russians deep down. There is no synergy at all in exclusionary trade ties for India with Russia.

And a partnership with China against the United States is insane. India has the highest trade deficit of any country with China ($60.1 billion) and China has been tricking India by showing a part of its exports from Hong Kong. On the other hand, India enjoyed a historical surplus with the United States which Trump is determined to end. Trump has been harder on his allies and the hardest on China but India would be scarred by such stunts as an alliance with China and Russia. Donald Trump will be a phenomenon for the next five years at most but the US establishment will never forgive India for aligning with Russia and China against America. Whosoever has floated the idea from the Indian side must be quickly pensioned off and preparations must be initiated for full-spectrum trade talks with the United States.

There is simply no instant remedy available for countering US trade hegemony. If India has to preserve its economic well-being and growth potential (damaged in the first term of this government), it must swallow its pride and make allowances for US demands. Although an economic superpower itself, China is reeling from the trade war with the United States. India stands no chance at all confronting the US. The time for anonymous officials to make irresponsible statements and suggest perilous courses is over. There is nothing more pressing than to engage the United States on trade and save the economy.