India appears unfazed as trade deadline with the U.S. nears. Here's why

As the model of accidental for India to seal a commercialized woody with the U.S. closes connected Aug. 1 — erstwhile tariffs are acceptable to summation to 26% — New Delhi appears to beryllium unfazed by the looming deadline, analysts told CNBC.

This comes adjacent arsenic a commercialized woody betwixt the U.S. and Japan was announced connected Wednesday, which addressed sticking points connected greater marketplace entree for American autos and cultivation products.

Like Japan, India has resisted greater marketplace entree for American cultivation products to support its section farmers, who signifier a sizable voting bloc. In its caller trade woody with the U.K., finalized connected Thursday, India managed to safeguard its astir delicate cultivation sectors from tariff concessions.

Indeed, India's Commerce and Industry Minister Piyush Goyal acknowledged that the assemblage was delicate to India successful an interrogation with CNBC connected Thursday.

"We are ever precise delicate to the interests of our farmers, the interests of our [Micro, Small, and Medium Enterprises], and volition guarantee that our areas of interest are good protected," Goyal said.

The bilateral commercialized statement betwixt India and the U.K. "set a code to each the Western powers" that New Delhi is acceptable to commercialized connected its ain terms, Sameep Shastri, vice president of the BRICS Chamber of Commerce and Industry, told CNBC.

However, arsenic the deadline looms, analysts accidental Washington besides has its reasons to finalize an statement sooner alternatively than later.

"Strategically, the U.S. has small involvement successful alienating India. It sees India arsenic a beardown spouse that tin signifier the Indo-Pacific landscape," Harsh V. Pant, Vice President of Studies and Foreign Policy astatine Observer Research Foundation, told CNBC.

Bringing manufacturing backmost to the U.S., particularly from China, has been a cardinal tenet of Trump's economical policy.

Because the Trump medication is mostly focused connected countering China's accomplishment connected the planetary stage, India represents a imaginable alternate to China successful planetary manufacturing, analysts told CNBC.

India's relation successful managing this large powerfulness rivalry "very, very, critical," said Pant.

As America "positions itself against China's scope into planetary proviso chains," shifting manufacturing to India becomes a earthy "compromise", and mightiness adjacent complement the displacement backmost into the U.S.," Vishnu Varathan, caput of economics and strategy astatine Mizuho Bank, said.

For example, the U.S. could power immoderate of the higher extremity of the manufacturing chain, which requires much exertion and skilled labor, portion India "complements it with cheaper labor," Varathan added.

In doing so, India mightiness beryllium capable to "cut China retired and presumption the U.S. much strategically," each portion walking the diplomatic tightrope, added Varathan.

India's relation successful the BRICS, a radical of 10 emerging economies, which includes Brazil, Russia, India, China and South Africa, could besides springiness New Delhi "a grade of flexibility successful U.S.-India deals," Observer Research Foundation's Pant said.

According to the Carnegie Endowment for International Peace, the bloc aims to situation Western-led planetary economical institutions and trim the dominance of the U.S. dollar successful the planetary economy.

On July 6, U.S. President Donald Trump threatened an further 10% tariff connected countries that align with the "Anti-American policies of BRICS," conscionable arsenic Indian Prime Minister Narendra Modi was connected a high-profile sojourn to Brazil for a BRICS summit.

Trump would repeat his threat implicit a week later, saying connected July 18 that helium would "hit [BRICS] very, precise hard" if they ever "really signifier successful a meaningful way." "We tin ne'er fto anyone play games with us," helium added.

Despite being caught successful the tug-of-war betwixt the U.S. and BRICS, India has appeared to flight Trump's wrath. Indeed, Trump hinted on aggregate occasions that the model for a commercialized woody with India is adjacent to the finishing line.

Within BRICS, India is facing expanding unit from China, which sees New Delhi arsenic "competing for a enactment role" successful the bloc, according to Mizuho Bank's Varathan. As such, it appears that India would beryllium utile to the U.S. arsenic a counterbalance to China successful the BRICS.

Trump has besides claimed that BRICS wants to "take implicit the dollar" done the instauration of an alternate reserve currency, contempt denials from members of the bloc.

This could beryllium different bargaining spot successful India's dialog arsenal with the U.S., Varathan said, arsenic India could enactment to "convince Trump that they are not connected committee with the program for an alternate currency."

He added that India could absorption connected what it tin transactionally connection to the U.S., which mightiness incentivize Trump to "treat them a small amended due to the fact that helium sees them arsenic being aligned."

India has been pushing for much commercialized deals adjacent arsenic it continues to negociate with the U.S. Sarang Shidore, manager of the planetary South programme astatine the Quincy Institute, pointed retired successful emailed comments that this is portion of India's "increased crook toward a multi-alignment strategy."

Besides the UK, India has precocious talks connected commercialized agreements with Maldives, the EU, and more, each portion "retaining its beardown nexus with Washington arsenic its biggest planetary partner," according to Shidore.

This diversification gives India leverage, some astatine the negotiating array and successful navigating planetary economical shocks. If the U.S. imposes higher tariffs oregon ties commercialized to much hard concessions, India could accelerate deals elsewhere, thereby softening the blow.

More than conscionable a hedging tactic, Shidore thinks this attack reflects India's broader worldview: arsenic a rising powerfulness that aims for multilateralism portion "championing the Global South."