Defence Through Commerce

The POTUS Donald Trump’s address to the US Congress has many takeaways. But Indians should be specifically interested in the following four issues: one, reciprocal tariffs are coming to India; two, tax cuts for American citizens; three, decriminalizing America; four, a balanced budget.

Fingers were crossed in India whether India will escape Trump’s reciprocal tariffs, having reduced tariffs on some items, especially electric vehicles (from 110% to 15%) to accommodate the entry of Elon Musk’s Tesla. It was also presumed that with the India-US trade deal being worked out, India may escape reciprocal tariffs. But those beliefs have come to naught. Finance Minister Nirmal Sitharaman (also referred to as Nightingale or Bulbul because of her histrionics) only has one line to sing – “we are the fastest growing economy”. Though it rhymes with the Defence Minister’s line – not even one inch of territory lost (to Chhina in Ladakh), the truth is that the RBI has had to infuse funds twice into the market not to let the INR fall below one Dollar, which may still happen.  

The Indian stock market had crashed even before Trump confirmed reciprocal tariffs on India because of the recent layoffs in the US. The Narayana Murthy-led Infosys alone faced a rout at the stock market, losing a staggering INR 52,697.93 crore in market valuation during the last trade week. According to market data, Infosys, ranked among India’s top10 most valued firms, has now a market capitalization of INR 7,01,002.22 crore, as the company’s shares tumbled during the week, closing at INR 1,693 on February 28. It is opined that if Trump levies tariffs on India’s agricultural products, it would adversely affect the Indian economy greatly, as also add to the existing unemployment figures. But trust Sitharaman to insist all is hunky dory, with Trump’s new tariffs adding to the existing rocketing prices of daily expenses of the common man. Not without reason the World Economic Forum’s Global Risks Report 2024 cites India as the leading country in terms of misinformation and disinformation. Notably, despite having the RBI Governor, former RBI governor Shaktikanta Das has been appointed as Principal Secretary-2 to Prime Minister Narendra Modi – a new post created for the first time. According to some economic analysts, India should not overreact to Trump’s reciprocal tariffs (are we in a position to overreact?) but work with other nations to improve economic ties. The fact is that in addition to reciprocal tariffs on India, Trump’s tariffs on China will also impact our economy adversely, whether we acknowledge this or not.  Yet, one can expect some ministers singing that India’s economy will grow to USD 7 trillion by ‘X’ year, and USD 10 trillion by ‘Y’ year.

Trump said he hopes Democrats will support him on tax cuts for American citizens; they actually have no option because if they don’t, they would lose a major vote share. In India, only 2.2% of the adult population pay income tax. Compare this to developed countries like France where 78.3% of population are income tax payers, 61.3% in Germany, 59.7% in the UK and 50.1% in the USA. Some are calling the present Indian tax system “tax terrorism” against the income taxpayers. The corporate billionaires eat the cake and carry it home also – get massive bank loans, which are written off because they contribute funds for elections. Government data shows in FY 2024, INR 1.7 trillion USD 20 billion) bank loans were written off (https://www.business-standard.com/finance/news/indian-banks-write-off-rs-1-7-trillion-in-loans-in-fy24-shows-govt-data-124112601126_1.html).

Trump has waived off tax on loans taken for Made-in-USA cars.  In India resale of India-made-car is also taxable, forget what loan was taken, when the car was bought and what loan is required to buy the replacement car. Only in Delhi-NCR (National Capital Region) no diesel and petrol cars can ply beyond 10 and 15 years respectively even if having valid no-pollution certificate. This, because successive governments are unable to control pollution levels, albeit vehicle pollution contributes only 4% to the overall pollution level. Imagine the plight of aged pensioners with no other source of income. The latest is that details on expenditure by an income tax payee are also to be submitted – so you pay for what you earn and your expenditure will also be taxed? All this while you have a politician showing earning of INR 5 crore from just one acre of land and paying no income tax because agricultural income is not taxable!

And regarding showing earnings and having the right relationship with the almighty IRS as good citizens of India – a new Income Tax Bill 2025 is coming. As per existing Section 132 of the I-T Act, 1961, the IRS authorities can audit any physical assets and accounts if they have a reason to believe that the individual is evading taxes. The new I-T Bill 2025 extends these powers to what is described as the “virtual digital space”, which includes person’s mobile phones, computer systems, email servers, social media accounts, online investment accounts, trading accounts, banking accounts, cloud storage and so on. The problem here – while ownership is defined, “reason to believe” is not. This could lead to very fluid interpretations and leaves the IRS without any major checks, essentially allowing them to pressure any inconvenient individual or business through unrestricted data harvesting. The bottom line here -  filling up the country’s budget not by business stimulating policies, which can grow the country in every way, but by milking every last penny out of that 2.2% tax paying population, which essentially makes every major public investment possible. The first step requires limiting corruption, the second encourages it. (https://thewire.in/government/income-tax-officials-will-be-able-to-access-your-emails-and-social-media-accounts-from-april-2026).

As for the decriminalization of the USA that Trump talked about, it is impossible to implement the same in India.   According to the media, data on criminalisation of politics presented to the SC showed that of the 543 Lok Sabha Members of Parliament (MPs), as many as 251 face criminal cases, and of them 170 are charged with offences punishable with imprisonment for five or more years. Criminalization of politics in India has been  explained earlier in these columns (https://www.thestrategicperspective.org/op-eds/reign-of-criminals/). There is no move to complete court proceedings despite setting up Special Courts a few years back and promises to complete trials in respect of law makers within one year. This criminalization percolates all the way down. Any proceedings against the opposition lawmakers are automatically dropped when they join the ruling political party.  All defence deals in India since Independence have included under the table dealings. It is the job of the bureaucrats involved to see the amount involved reaches the destination(s) before the actual deal is signed. This should be seen together with the fact that if a case is filed for irregularities in a defence deal involving the government of the day, the judiciary has no option but to side with the ruling party.

Trump has promised a balanced budget. Is India’s budget balanced? Certainly not when it comes to defence – the defence budget remains negative in actual terms throughout the last decade and more, despite the mounting threats to India’s national security. This is being attributed to the belief that there will be no war; with the prime minster saying this is not the era for war, this is the age of Buddha not Yuddha (war), and the like. In his first address to the police academy in 2014, NSA Ajit Doval said there will be no war and everything has to be done by the police.

The defence minister has publicly said Pakistan-Occupied Kashmir will automatically fall in our lap (sic). Interestingly, a section of Indo-Americans (who are US Citizens) say clearly war with Pakistan is no more an option as neither Adani nor Ambani will want that – Gujarat is pioneering a novel concept of ‘defence through commerce”. Take this whichever way one wants to but the fact is that in the last decade plus, the “surgical strike” and the “Balakot standoff air strike” were both reactive actions having suffered heavy casualties, at Uri and Pulwama respectively at the hands of Pakistani terrorists. Ironically, despite suffering 40 CRPF personnel killed in the Pulwama terror attack, no one questioned why 3,000 CRPF personnel were sent in a convoy without a single officer travelling with them and without proper armed escort.     

In his address to the US Congress, Trump thanked Pakistan for helping to capture the ISIS member (Sharifullah) involved in the suicide attack at Kabul airport that killed several Americans and seriously injured more than 42 people. He said, "I thank the Pakistani government for helping to capture this monster who was involved in the killing of 13 Americans and seriously injuring more than 42 people." He added that the arrested terrorist is being brought to the US. While Trump thanked Pakistan for CIA -ISI joint operation, doesn't he know that ISKP/IS-K is the creation of Pakistan, very well known to US intelligence, mentioned in the link below (https://www.thestrategicperspective.org/articles/donald-trump-and-islamic-terrorism/). The significant part is that Sharifullah was nabbed in a joint special operation by the CIA and Pakistan’s ISI. Does this indicate the continuing CIA-ISI partnership and Pakistan buoyed to increase mischief against India, with the US looking the other way if Trump finds India not toing the line in the manner he wants?

Is India prepared for war, definitely not (https://www.thecitizen.in/opinion/prudence-lies-in-being-prepared-for-war-1115130) unless we fight with whatever we have and blame whatever the outcome on the military. And, let us not talk of fighting a nuclear war. Becoming a military power requires much more defence allocation in the budget, which the government is loath to, despite avoidable massive expenditure on elections, advertisement and of course misinformation-cum-disinformation. The belief is defence through commerce (as pointed out by some Indo-American US citizens – as mentioned above) is adequate; which amounts to living in a fool’s paradise.

A major reason why we are not yet a military power (forget the rhetoric) is because we lack certain critical technologies, which the west refuses to transfer to us in totality. Even France. Despite the Rafael fighter aircrafts purchased and defence deals in the pipeline (like the Rafale-M) is not ready to transfer critical technologies. Same goes for the F-404 IN engines being supplied by the US; despite the promise of 100% technology transfer is not going to transfer the technology of the critical inner core. The defence minister is making foreign trips requesting transfer of critical technologies, which may elicit promises but without concrete outcomes.

This is where defence through commerce can play a role. Look at the countries (including the EU) making a bee-line for India to sign an FTA. Some FTAs are already in the works like the one with the UK, which is pouring money to fuel the war in Ukraine despite its economy being in a poor state. India must take advantage of this and announce that the actual signing of the FTA would only be after the technology transfer is affected – listing out which technology transfer it wants from which country. The question here is with the trader/commerce mentality of India’s political hierarchy, together with the hurry to sign FTA’s and notch milestones, can the government hold its horses and emphatically make such demands (where applicable), even at the cost of delaying signing some of the FTAs?

The author is and Indian Army veteran. Views expressed are personal.