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Key Takeaways after Modi's Trip to D.C.

Jun 29, 2017
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The White HouseSMITH BRAIN TRUST – When Indian Prime Minister Narendra Modi visited with President Donald Trump this week, much of the coverage was about the Rose Garden handshake-turned-hug.

But the visit contained far more substance, from terrorism to trade to visas. Experts from the University of Maryland's Robert H. Smith School of Business were watching closely. They offer the following insights.

Keeping the waters calm

Anil K. Gupta, the Smith School's Michael D. Dingman Chair in Strategy and Entrepreneurship, said this week there were "potential irritants" between India and the United States going into the meeting, among them possible reductions in H1B visas in the United States, the existing trade deficit and stark differences on the Paris climate agreement.

"I would assume Mr. Modi tried to keep the waters calm and talk about the potential for the trade relationship to get a whole lot better," Gupta said in an interview on CNBC. Last year the U.S. ran a trade deficit with India of nearly $31 billion, and Trump has been urging Modi to relax Indian trade barriers, saying he hopes for a "fair and reciprocal" trading relationship.

Trade front

Gupta said he sees potential for India to import more U.S. defense goods, natural gas and Boeing aircraft. "I think there is reason for optimism in the trade relationship between India and the U.S. for it to become more balanced," Gupta said.

Gupta said it seemed clear that President Donald Trump was adequately "prepped" on India by members of his cabinet – likely Secretary of State Rex Tillerson, Secretary of Defense James Mattis, National Security Advisor H.R. McMaster, Secretary of Commerce Wilbur Ross and Treasury Secretary Steven Mnuchin.

"My guess is that Trump's interactions with India – he visited India in 2014 – have been positive," said Gupta, who teaches in the management and organization department in the Smith School.

He says there is "strong bipartisan support for India" in both the Senate and the House. "All of that laid the groundwork. It could've gone the other way … But it seems to have gone off quite positively."

View from New Delhi

"The visit did not break much new ground, and was focused on the two leaders getting to know each other," says Kislaya Prasad, research professor of decision, operations & information technologies at the Smith School. Prasad was traveling in India during Modi's visit to Washington.

"There were a lot of public pleasantries and compliments for one another," says Prasad, who is also director of the Smith School's Center for International Business Education and Research. "By all accounts, they seemed to get along well."

And that's how the visit was portrayed in the Indian media, and in the leaders' joint statements. The leaders emphasized their agreement to fight radical Islamist terror, for example, Prasad says, while veering the discussion away from "contentious issues, like restrictions on H1B visas."

"Indian newspaper headlines focused on their joint commitment to fighting terror and calls on Pakistan to do more to prevent cross-border terrorism," Prasad says. "Much was made of the largely symbolic step of the U.S. declaring Syed Salahuddin, who resides in Pakistan, a ‘specially designated global terrorist' in advance of the meeting of the two leaders."

There was "muted criticism" of China and its actions in the South China Sea, Prasad says, adding "but some in New Delhi are uncertain about the U.S. strategic commitment to containing China in the Trump era."

Nationalistic times

Both Modi and Trump are known for their nationalistic visions – "Make America Great Again" and "Make in India." And Modi, in the U.S., emphasized that those visions are not necessarily in conflict.

"However," Prasad says, "it is not clear that he made any headway on the issue of restrictions on H1B visas – an issue that is very important to the Indian software industry. While commending Mr. Modi for announced Indian Defense purchases from the U.S., President Trump appears not to have yielded much on trade issues, where his views (in particular on reducing U.S. trade deficits and shifting jobs back to the U.S.) are quite set."

"In this context," Prasad adds, "it is probably worth mentioning that Mr. Modi met the CEOs of several U.S. companies intent on establishing or expanding their presence in India (such as Apple and Amazon). He earned some praise from them – as also from President Trump - for the tax (GST) reforms set to go into effect on July 1."

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About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and part-time MBA, executive MBA, online MBA, specialty master's, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.