American Sanctions and the Unequal Partnership: India’s Path Forward

By Mukesh Devrari

The Indian media is shocked by the Trump administration’s policy towards India. In his first term, when Pakistan used a suicide bomber to attack a bus full of security personnel in Kashmir, the American administration supported India’s right to retaliate. The result was that Pakistan did not launch another attack due to the fear of India’s retaliation and America’s stance towards such actions. Six years after the Pulwama attacks, Pakistan-trained Islamic terrorists in Kashmir attacked again, and identified Hindus before killing them. The attack shocked India, while global media largely ignored it.

India tried to retaliate, but the Trump administration did not support India. In fact, it pressured India to stop the attack. India lost six fighter jets as Pakistan shot down Indian aircraft using PL-15 air-to-air missiles launched from J-10 fighters. India would have done better if it had shown the courage to launch retaliatory strikes bigger than symbolic ones. The terrorist training camps run by Jaish-e-Mohammad and Lashkar-e-Taiba were targeted, but many prominent Pakistani journalists claimed India had targeted “freedom fighters.”

It is difficult to guess what goes on inside Trump’s head, but the only evidence available that could explain his change of heart is the American and Israeli attacks on Iran. It is essential to note that Pakistan is the only Muslim country with nuclear bombs and has long supported the United States in targeting its neighbours. It trained terrorists for years to destabilise Afghanistan; even during American control, Pakistan funded the Taliban to undermine the U.S.-backed regime. Pakistan is the only country besides China that has defeated America in a proxy or real war. The Chinese fought Americans in Korea and ensured they still control half of Korea, now North Korea.

If Pakistan openly supports Iran and Iran’s quest for a nuclear bomb, it can pose an existential threat to Israel. The Pakistani military has always been pragmatic in offering help to Americans to invade Iran. The first round of U.S. bombing of Iranian assets has been completed, but that is not the end. Israelis are not known for stopping at bombing alone; they continue until they change regimes and destabilise their opponents completely. The world has already seen the fate of Syria and Bashar al-Assad. In fact, in the Middle East, no country can remain stable and safe if it goes against Israel. In short, Pakistan supported the Americans in their plans to target Iran, and in return America supported Pakistan, coming to its rescue after India decided to retaliate.

The Modi government punctured the policy of using terrorists as a tool of statecraft under a nuclear umbrella. It tried to send a clear signal that if Pakistan attacked India by sending Islamic terrorists, India would retaliate. After this latest fiasco, Modi’s government has made it clear: now not just the terrorists and their camps, but their sponsors will be punished. It means that during the next war, the installations of the Pakistani military, air force, and navy will be targeted. Meanwhile, Pakistan is ordering more J-10 aircraft, and according to some reports, it plans to import one hundred thousand small drones from Turkey and China. This means India needs to install at least one thousand BrahMos missiles at the border and be prepared to use them to destroy enemy assets in the next conflict.

Some Indian analysts are giving non-serious assessments about Trump’s motives. Trump is a known racist. His views about Black victims of police brutality are publicly known. He is against immigrants from non-Caucasian nations. America is home to illegal immigrants from around the world, and many Indians go there illegally as well. The Trump regime not only deported a plane full of illegal immigrants but also humiliated them publicly to send a message. India was the only country that received its illegal immigrants in a military plane after they were handcuffed. Colombia, by contrast, refused to accept such humiliation and sent its own plane to collect its nationals.

What is ahead?

India must keep in mind that India and America are not equals. In this bipolar world, the U.S. is the strongest superpower and literally runs the world alongside other Caucasian nations. Yes, American policies are hypocritical, but America has the economic and military might to bully independent-minded countries into submission by threatening them with consequences. Even China, despite making remarkable progress, avoids unnecessary confrontation with the United States. India stands no chance of achieving anything by confronting it directly.

What India should do is carefully invest in key technologies and, if possible, become a world leader. UPI is an example: half of the global online transactions are now done in India. But the government must ensure the system is not monopolised by American companies. Currently, PhonePe (which is relatively less harmful) and Google dominate the market.

India should also ensure that American companies operating in India follow domestic laws—or else they should be banned, as most of them have little social utility. Take Meta companies, for example: if Facebook, WhatsApp, and Instagram were banned in India today, what would India lose? The answer is nothing. These social media platforms can easily be replaced. For instance, Indians created Flipkart, which—even though funded by foreigners and now owned by Walmart—is worth billions. Flipkart succeeded only because Amazon was initially restricted in India. But once FDI in retail was allowed, Amazon entered and captured half the market. That is a huge loss of opportunity for Indian operators. Imagine: Indians are selling goods to other Indians within Indian territory, yet 30% of the sale price goes to Amazon—a foreign company that is merely running a website.

India should not shy away from signing a trade deal with the United States. The cost of manufacturing in India and the U.S. is so different that the U.S. cannot compete on price. America has technology and capability, but India lacks it. The era of free trade and globalisation is over. Americans no longer have confidence they can lead the world in science, technology, and innovation. They are trying to safeguard their lead by stopping other countries from acquiring these capabilities. They are targeting not only China but also friendly countries. India is in a strange situation: it does not produce anything truly irreplaceable. Therefore, India must tolerate humiliation, however painful, while waiting for its time to come. Meanwhile, it should continuously seek cooperation, expand bilateral trade as much as possible, and simultaneously build leadership in key technologies.

India must also create a parallel ecosystem. The Modi government is trying to build one in hydrogen vehicles. While the U.S. and China are focused on battery technology (where India has little scope to catch up), India must accelerate its use of green hydrogen. Solar power should be used to generate electricity, that electricity should produce green hydrogen, and that hydrogen should fuel transport and passenger vehicles. If the Modi government succeeds in this ambitious plan, it could be the next “UPI moment” for India. Developing an indigenous parallel system would allow India to invest in research and development, gain leadership in new energy, and reduce dependence on imported batteries and fuel.

Consider the scale of India’s fuel imports: even a one-dollar increase in crude oil prices adds $1.18 billion to India’s import bill. This is when car ownership rates in India are still very low. If the government encouraged mass car ownership, fuel consumption and imports would skyrocket. Therefore, India must harness its energy capacity strategically to balance trade deficits with countries like the U.S.

China already took maximum advantage of globalisation over the last three decades, and now no developed country is willing to offer the same space to any other major economy. The U.S. is not even willing to tolerate imports from its vassal states like Japan and South Korea—there is no chance it will tolerate imports from India.

In short, India must learn from China: focus on building capabilities. Create clones of U.S. technology companies. Invest in key technologies such as aviation, 6th-generation telecom, radar, space science, agricultural science, pharmaceutical research, semiconductors, material science, and metallurgy. Reduce corruption. Give companies genuine opportunities to make money by building factories. Remove outdated labour laws and unnecessary regulations. Bureaucrats should not have the power to bully businesses or seek bribes for permissions. Make everything online, transparent, and simple. Don’t allow environmental laws to be misused to kill economic progress. Above all, invest in education—from schools to universities. Indian politicians still fail to understand its true importance.

(End.)