SHANTHIE MARIET D’SOUZA
For the past several months, Indian negotiators have been trying, albeit unsuccessfully, to finalise a trade deal with the United States. On several occasions, negotiators, including India’s commerce minister and its chief economic adviser, have hinted at an impending breakthrough. Advanced-stage negotiations have been cited, or even an “intuition” that the bilateral trade agreement could be signed before 30 November, and that it would lower the punitive 50% tariff imposed by the Trump administration on Indian imports to about 10-15%.
While “hope still floats” in New Delhi, there is an overall assessment that India-US relations are in a downward spiral and will struggle to recover.
The non-conclusion of the trade deal is an unexpected development for the government in New Delhi, which seemed to have preferred the return of a Republican administration in Washington, one that doesn’t make human rights, religious and press freedoms important pillars of its foreign policy. However, after taking office, Trump unveiled a vastly different India policy that essentially wipes out the fond memories of his first term.
There is no definitive explanation, but the brief war between India and Pakistan in May has further damaged relations. While Trump repeatedly claimed credit for ending the war, the Indian government refused to acknowledge, fearing a domestic backlash for having allowed international intervention in a bilateral conflict. Islamabad, meantime, played a smart hand by acknowledging Trump’s role.
Although New Delhi continues to portray optimism about US ties, there is significant disappointment that it has been singled out for the highest punitive tariff. The extra 25% tariff imposed for the importing of Russian oil is even more disappointing, given the fact that China imports much more, and even some of the NATO countries, which also remain dependent on Russian energy supply, have escaped Trump’s ire.
Demonstrations in India over the Trump tariffs (Prakash Singh/Bloomberg via Getty Images)
Demonstrations in India over the Trump tariffs (Prakash Singh/Bloomberg via Getty Images)
Indian ministers have sought to justify the trade deal stand-off by claiming it results from India’s tough posturing amid the Trump administration’s push for exports of American agricultural products and automobiles, which would hurt India’s farmers and industry. Bold statements that India would not be in a hurry to sign a deal that compromises its interests have been repeatedly made. Meanwhile, Indian exports to the US have witnessed a sharp dip of 37.5% in the May-September 2025 period.
Bilateral relations seem to be in a free fall. Trump has no plans to come to New Delhi for the Quad leaders’ summit planned for this year, thereby effectively quashing the prospect of this important gathering. He has refused to heed the advice of US lawmakers – mostly Democrats – not to allow the US-India relations to further deteriorate. The 10-year framework for a US-India major defence partnership, inked in Kuala Lumpur on 31 October, appears no more than an American plan to sell more military hardware to India. Similarly, the six-month waiver on Indian operations at the Iranian Chabahar port could also be a pressure tactic on India to bend to American policy.
The thought process that a Modi-Trump meeting would be able to set the clock right has been replaced by avoiding any meeting.
Although Trump still occasionally mentions Modi as his “friend”, there seems to be little will to accommodate Indian interests by rethinking his proclamation on the H1-B working visas in the United States, which is likely to affect a large number of Indians. It is difficult to see where India figures in Trump’s glory-seeking foreign policy and worldview, especially when Modi and Indian diplomacy have refused to give the American president the fame he has repeatedly sought.
Nevertheless, Indian diplomacy appears to be at its wit’s end to deal with an unpredictable Trump. A curious medley of tactics has been adopted. This includes Modi repeatedly endorsing Trump’s Gaza peace plan, but skipping the Gaza summit in Sharm el-Sheikh despite an invitation from Egyptian President Abdel Fattah El Sisi. The thought process that a Modi-Trump meeting would be able to set the clock right has been replaced by avoiding any meeting, where the US president may repeat his claims of ending the India-Pakistan war. Modi chose to attend the ASEAN summit in Malaysia virtually, citing his involvement in an upcoming high-stakes state election in Bihar. Modi’s absence from the event was a setback to India’s much-avowed Act East Policy that seeks to integrate India’s economy with that of the Southeast Asian nations.
At one level, India’s rivalry with Pakistan and Trump’s proximity to Islamabad’s political and military leadership are viewed to be limiting New Delhi’s options. Yet in another way, India’s attempts to improve its ties with Beijing to reignite Washington’s interest in New Delhi has limitations. Trump’s preference to make deals with Beijing can effectively reduce India’s strategic importance for Washington and make it vulnerable vis-à-vis China’s assertive foreign policy.
In the face of these changing dynamics, India may already have signalled its willingness to reduce its energy imports from Russia and increase its crude imports from the United States. Such compromises could form the foundation of a US-India trade deal. However, to expect that to be the magic wand that would revive the strained relationship between the two countries could be presumptuous.
The article was published in the lowyinstitute
