Trump meets Modi: Trade, visas and climate could make for tough talking

Trump threatens Indian engineers' American Dream
Trump threatens Indian engineers' American Dream

Nearly six months after he took office, President Trump will welcome Narendra Modi to the White House on Monday.

The Indian prime minister represents one of the world's fastest growing major economies and a market that American companies are eager to crack. His meeting with Trump will be preceded by one with several top U.S. CEOs.

Despite the obvious opportunity, the relationship is tense and the talks may not be easy.

Here are three thorny issues that could make for an uncomfortable visit.

Immigration

Indians are the top beneficiaries of one of the United States' most popular work visas, the H-1B. They account for about 70% of the visas awarded annually, most of them going to workers from India's $150 billion tech industry.

But the H-1B visa has become a very sensitive subject under Trump, who has repeatedly accused tech companies in the U.S. of using the program to replace Americans with cheaper foreign workers.

His "Buy American, Hire American" executive order in April called for a comprehensive review of H-1B visas. The prospect of change is making Indian outsourcing firms increasingly nervous.

Related: Indian tech firm makes it official -- Trump is a risk to its business

Modi will likely reiterate his government's view that Indian techies are needed to address America's skills shortage, but criticism of the H-1B program goes way beyond Trump.

"This issue has always been complicated between the U.S. and India," said Alyssa Ayres, a former State Department official and now a South Asia analyst at the Council on Foreign Relations.

"Trump actually is reflecting a view that I think is fairly widely held... that the present structure of the H-1B program is no longer working as it was designed to work," she said.

'America First' or 'Make in India'

Since taking office in 2014, Modi has been trying to boost India's manufacturing industry, under a program called "Make in India." His government has been encouraging foreign companies to set up production locations in the country, and many -- including several top U.S. firms -- have done so.

Apple recently began assembling iPhones in India, while defense manufacturing giant Lockheed Martin (LMT) will make and export F-16 fighter jets from the country if it wins a big order from the Indian Air Force. Ford said in November that it will be the first automaker to import vehicles to the U.S. from India -- starting in 2018.

Related: Elon Musk says Tesla can't yet launch in India

donald trump narendra modi

The potential for a clash between "Make in India" and Trump's pledge to put "America First" by bringing jobs and manufacturing back to the U.S. is obvious. While Trump has criticized other big trading partners such as Mexico, China and Germany, he has not yet called out India, barring a veiled reference to import duties on Harley Davidson that the motorcycle giant doesn't actually pay.

"India's off the radar screen a little bit for some of those kinds of issues," Ayres said.

That could change very quickly. Trump's goal of reducing America's trade deficit could soon place India -- which has a $24 billion trade surplus with the U.S. -- in the crosshairs.

"We do expect Trump to raise concerns with the U.S.-India trade deficit," Eurasia Group analysts Shailesh Kumar and Sasha Riser-Kositsky wrote in a research note this week. "He will prod Modi to further open India's markets and pursue policies that support greater imports."

Modi is unlikely to commit to relaxing import restrictions further, they added.

Climate change

This may not be on the formal agenda but forms part of the tense backdrop against which the meeting is taking place. India, along with China, is now aiming to lead the world into a more sustainable future after the U.S. withdrew from the Paris climate agreement earlier this month.

Trump called out India while announcing that decision, slamming the country for apparently demanding "billions" in foreign aid for signing the agreement. India hit back, saying there was "absolutely no reality" in his claim.

Related: It's 'wonderful' Trump ditched Paris climate deal, says coal king

While Trump has pledged to bring jobs back to the U.S. coal industry, Modi's government has set ambitious renewable energy targets -- including a pledge to sell only electric cars by 2030.

But some experts think that the two countries have a golden opportunity to set aside these differences.

"India's future plans to advance on electric cars and pursue greater sustainability will require digital innovations and partnerships," said Arun Agrawal, a professor of environment at the University of Michigan. "Those who care about climate change and sustainability will be excited about Prime Minister Modi's visit to the U.S."

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