Indian Prime Minister Narendra Modi visited the United States and met President Donald Trump and several other top US officials. The visit occurred amid widespread concerns over Trump’s tariff policies as well as ongoing debates about the Trump administration’s transactional approach to foreign policy. Modi’s visit also occurred after domestic public outrage and opposition criticism in the Indian Parliament over the deportation of 104 Indians from the United States, with reports and images showing them in shackles. Modi and Trump have strong domestic support and are known for their focus on optics and projecting a strongman image. Moreover, both leaders in their political careers have mobilized their voter bases using nationalism and framing their respective foreign policies as necessary to protect national interests. During their meeting, they discussed ways to strengthen bilateral ties and further enhance people-to-people ties and multilateral cooperation.
Trump met Modi shortly after he announced reciprocal tariffs against all US trading partners. The policy, though under review, has already caused global concern as it could lead to tariff hikes, potentially raising import costs. Given Trump’s emphasis on economic nationalism, New Delhi has been closely monitoring the situation ever since he reentered the White House. During his election campaign, Trump called India a “tariff king” and a “big abuser” of trade ties and advocated for measures to balance the trade deficit. To ease tensions, the Indian government, in its recent budget and through later notifications, agreed to lower import duties on key US products of interest such as premium automobiles (heavyweight motorcycles), metals and electronic items – signaling a commitment to constructive engagement with the Trump administration. India also plans to enhance market access for certain US agricultural products. Rising tariffs and the pressure to increase imports from the United States may complicate India’s plan to boost domestic manufacturing and reduce dependence on imports under the “Atmanirbhar Bharat” (Self-sufficient India) plan. As per the responses from India’s Foreign Secretary Vikram Misri, India is exploring trade agreements that could mutually benefit in addressing key market concerns, and negotiations are expected to follow in the coming months. Indian benchmark indexes fell as the Modi-Trump meeting failed to resolve market angst and concerns over tariffs.
In 2024, bilateral trade touched $129.2 billion, with a $45.7 billion US trade deficit as exports rose to $41.8 billion and imports to $87.4 billion. While balancing the trade deficit remains the key US priority, for India, energy and defense emerge as the two most crucial considerations in its foreign policy. India’s oil import strategy remains price-driven, sourcing from the most competitive suppliers. Until 2021, India was featured as a top destination for US oil exports; however, this trend changed after the eruption of the Russia-Ukraine war and the subsequent impact on the global oil market. While Russia is India’s top oil supplier due to steep discounts, this may change in the near future. This was indicated by India’s Energy Minister Hardeep Singh Puri who reiterated India’s commitment to energy security through diversification. However, India’s price-sensitive approach contrasts with Trump’s emphasis on reducing the US trade deficit. Though increased US energy exports to India align with his objective, the United States may need to offer more competitive pricing and policy incentives to secure a larger share of India’s growing energy market. India is one of the top oil refining countries in the world and one of the largest oil importing countries, making it a critical player in the global energy market.
Similarly, in defense, India’s efforts to boost indigenous production and limit large-scale imports, require the United States to offer technology transfers and long-term strategic benefits to maintain the modernization of the Indian defense sector, especially as the opposition has criticized the Modi government for shortcomings of the “Make in India” initiative and its ongoing dependence on foreign suppliers. As per the joint statement India and the United States are set to sign a 10-year defense framework under COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce and Technology) and key initiatives include expanded defense sales, co-production of advanced systems, streamlining of arms regulations, enhancing industry partnerships in autonomous systems and negotiations for a Reciprocal Defence Procurement (RDP) agreement.
The United States has also offered India fifth-generation fighter jets like F-35 jets, but Misri, in a press conference, clarified that the deal is only at the proposal stage. The acquisition of F-35 jets is currently debated in India because of its pricing in comparison with Russian Su-57 jets. There are concerns that India could face pressure to commit to such expensive defense acquisitions, potentially straining its defense budget and long-term procurement strategy. Given New Delhi’s emphasis on cost-effective acquisitions and indigenous defense manufacturing, any deal involving F-35 jets would likely hinge on favorable financing terms, technology transfers and strategic alignment within the broader India-US defense partnership.
Plans like the US-India TRUST (Transforming the Relationship Utilizing Strategic Technology) Initiative will focus on enhancing cooperation in AI, semiconductors and space technology. Another key area of cooperation is civil nuclear energy, where India and the United States have reaffirmed their commitment to advancing collaboration through large-scale localization and technology transfer for nuclear reactors. To overcome past legal hurdles, India is amending its Atomic Energy Act and Civil Liability for Nuclear Damage Act, enabling private-sector investment and addressing supplier liability concerns.
Despite Modi’s visit and the subsequent developments in India-US relations, challenges remain. For example, India’s membership in BRICS, which aims to challenge the US-led global order and promote an alternative financial system, is likely to be a thorn in India-US relations. Already, Trump has threatened a 100% tariff in response to BRICS’ de-dollarization efforts. However, for India, BRICS remains central to its push for global governance reforms and ambitions to become a global power and lead the Global South. Given India’s crucial role in the Indo-Pacific as a bulwark against China, and its strategic importance in the Quad, I2U2 and IMEC for strengthening supply chain resilience, security and energy partnerships, the Trump administration is unlikely to make a big issue out of New Delhi’s non-alignment on certain issues while addressing concerns and sources of tensions via diplomatic channels. In the current US-Sino rivalry context, India and the United States will likely deepen their cooperation on defense, counter-terrorism, maritime security and capacity-building initiatives aimed at ensuring a free and open Indo-Pacific, which is a top priority for the United States and its regional allies.
