US-India Trade Deal To Lead To Job Losses? Ajay Bagga's Stern Warning

After the Centre's latest rebuttals on India-US trade deal delays, rejecting speculations that pact failed to materialise because of Prime Minister Narendra Modi, renowned market expert Ajay Bagga has issued a stern warning against the simmering trade deal between the two nations.

In an exclusive interaction with NDTV Profit on Monday, Jan. 12, Bagga also expressed disappointment over the criminal investigation launched against US Federal Reserve Governor Jerome Powell. He threw light on the adverse impact that the trade deal with the US may have on the Indian economy.

According to Bagga, the India-US trade deal is not happening in a hurry and he does not see any requirement at the US' end to push through the deal. ''I don't foresee a trade deal. They're making an example out of India,'' said Bagga. The expert believes that the 25% excess punitive tariff on India could be removed, in case there is a Russia-Ukraine peace deal.

However, just on the India-US negotiations, Bagga claimed that the deal ''is not happening''. Giving a warning, he explained, ''It is a very big risk for India. Second-order effects will start coming in, in terms of job losses in the textiles, gems & jewellery and leather sectors.''. However, he added that the bigger risk will come towards India's service exports.

Elaborating on the trade deal, Bagga said India needs to conclude atleast ''some kind of a transient agreement, even if a trade deal doesn't happen''. However, he added that after the Venezuelan crisis, ''its a very aggressive Trump administration'', and doubts if there will be any movement on this front.

Union commerce minister Piyush Goyal on Sunday urged for trust in India, a day after the Ministry of External Affairs firmly rejected speculation that the India-US trade agreement failed to materialise because Prime Minister Narendra Modi did not place a phone call to US President Donald Trump.

Responding to a question on United States Commerce Secretary Howard Lutnick's comment that negotiations with India failed while Washington moved ahead with with other countries, Goyal said at NDTV Power Play, "Trust your country, your motherland, not foreign statements".

The leading market expert also said that Fed's Jerome Powell facing a criminal indictment is a ''huge disappointment''. ''It's a criminal investigation against a sitting central bank governor and Powell saying that it is a political decision, is very disappointing,'' said Bagga.

In a formal US Fed statement issued after the development, Powell said, ''The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.''

''This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation,'' said Powell.

Further, Bagga eyes a market reaction. ''Let's see if markets react the way it did, in terms of bonds getting unstuck. Last time, around liberation day tariffs, that was how markets showed its disappointment with the whole thing,'' said Bagga. Coming to whether the US planning an attack against Iran, he believes that ''Iran action seems to be on the anvil and can happen anytime.

''US military may need some more time to build enough arsenal in the region in terms of planes and missiles,'' explained Bagga. ''Iran is a very strong and ruthless regime which turns on its people. So, I don't think if it will be a regime change that the US can engineer just by aerial bombarding. It's not Iraq and definitely not Venezuela. It's a very well-armed and Russian-supported regime which won't be that easy,'' he said.