US secretary of state Mike Pompeo downplayed a trade spat with India in an attempt to salvage the rapidly deteriorating economic relationship between Washington and New Delhi.

Mr Pompeo said at a press conference in New Delhi on Wednesday that he was optimistic both sides could reset trade relations, but gave few details on whether any tangible progress had been made.

“Great friends are bound to have disagreements; the United States has been clear we seek greater market access and the removal of trade barriers in our economic relationship,” said Mr Pompeo, speaking alongside his Indian counterpart Subrahmanyam Jaishankar. 

“Today I addressed these differences in the spirit of friendship and I think that the two of us will be able to see a good outcome for each of our two countries,” he added.

The secretary of state is visiting India on a trip to the Indo-Pacific region ahead of the G20 summit in Osaka, where he is laying the groundwork for an expected meeting between US president Donald Trump and Indian prime minister Narendra Modi.

His visit comes at a critical time for Washington and New Delhi following a tit-for-tat trade battle that saw the US withdraw preferential trade privileges and India retaliate by imposing import tariffs on more than 20 US products, including walnuts, apples and lentils.

Mr Trump has lashed out at India’s protectionist policies, describing the country as a “very-high tariff nation”. Analysts warn the tariff escalation threatens to undermine the deepening US-India relationship at a time when the two countries are working together to counter China’s growing ambition in the region.

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New Delhi’s new ecommerce and data localisation regulations have frustrated Washington, which has complained that the policies do not allow US companies access to a “level playing field”. Despite more than a year of negotiations, both sides have struggled to reach a compromise.

Other irritants are the threat of US sanctions, which have forced India to stop purchasing oil from Iran, which supplies about 10 per cent of its oil. Washington has also objected to New Delhi’s decision to purchase Russia’s S-400 air defence system, on the grounds that it would compromise the security of US fighter jets.

India, which has long valued its strategic autonomy, has bristled at the US demands to rebuff Iran and Russia, two longtime allies who have historically provided India with oil and military hardware.

Still, Mr Jaishankar, a veteran diplomat and former ambassador to the US, echoed Mr Pompeo’s upbeat tone. “We are committed to making it easier to do business, to provide a level playing field and to grow with the world economy,” he said.

On Iran, Mr Jaishankar said “I think we will do what it is in our national interest, and again part of that strategic partnership is the ability of each country to comprehend and appreciate the national interest of the other.”

Analysts said the meeting was a positive development after months of turmoil. “The relationship was in trouble and this was a meeting to take stock and find ways to reverse course,” said Samir Saran, of the Observer Research Foundation, a think-tank in New Delhi. “The fact the meeting took place was itself an achievement, that itself demonstrates determination in both quarters to set things right,” he added.

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Mr Pompeo will travel to Japan before accompanying Mr Trump on a visit to South Korea for a meeting with President Moon Jae-in.



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