Prime Minister Narendra Modi’s visit to Washington, D.C. last week culminated in a plethora of announcements spanning trade, defense, energy, technology and global security.
Modi is the fourth head of government to arrive in the U.S. capital for face time with U.S. President Donald Trump. It indicates the Trump administration’s desire to advance relations with New Delhi and comes as Trump displays increasing unpredictability in his foreign policy, which has caught traditional allies and trading partners off guard.
As anticipated, trade issues dominated discussions. President Trump has long been a vocal critic of India’s tariff structure, even describing New Delhi as a “tariff king” and a “big abuser” of trade ties. Ahead of the visit, he ordered his administration to consider imposing reciprocal tariffs on numerous trading partners, including India, which, in his words was “at the top of the pack” of the list of countries that “charge tremendous tariffs.”
Notably, New Delhi announced significant tariff reductions in its recently released annual budget, reducing average tariffs from 13 percent to 11 percent and peak import tariffs from 150 percent to 70 percent. India also announced a reduction in import duties on high-end bikes and bourbon whiskey, which is going to benefit American brands like Harley Davidson and Suntory’s Jim Beam.
Delhi’s move set the stage for a series of trade-related agreements during the meeting, including plans to negotiate the first tranche of a “mutually beneficial, multi-sector” bilateral trade agreement (BTA) by the fall of 2025. The two sides also announced “Mission 500,” which aims to more than double total bilateral trade to $500 billion by 2030. Towards that end, both sides pledged to enhance bilateral trade by increasing U.S. exports of industrial goods to India and Indian exports of labor-intensive manufactured products to the United States.
On the defense front, the leaders announced plans to sign a new 10-year “Framework for the U.S.-India Major Defense Partnership in the 21st Century.” Washington is set to expand defense sales to India with New Delhi set to buy Javelin missiles, Stryker vehicles, and more P8i aircraft from the U.S. During the joint press conference, President Trump also informed that Washington was “paving the way” to provide India with the coveted F-35 stealth fighters.
They also announced a new initiative, the Autonomous Systems Industry Alliance, aimed at boosting co-development and co-production of maritime drones and counter-drone systems. Both sides also agreed to review International Traffic in Arms Regulations regulations and open negotiations for Reciprocal Defense Procurement, both of which are expected to significantly facilitate bilateral military trade. It complements the Security of Supply Arrangement and Memorandum of Agreement regarding the Assignment of Liaison Officers signed earlier last year that enables both countries to “acquire the industrial resources they need from one another to resolve unanticipated supply chain disruptions to meet national security needs.” Apart from this, both sides agreed to elevate military cooperation across all domains – air, land, sea, space, and cyberspace – through enhanced training, exercises, and operations, incorporating the latest technologies.
Washington also expressed its intention to build U.S.-designed nuclear reactors in India through “large scale localization and possible technology transfer” in order to “fully realize” the U.S.-India 123 Civil Nuclear Agreement. Since the signing of the agreement in 2008, the U.S. has not provided New Delhi with any reactors, even after the Nuclear Power Corporation of India entered into an agreement , to build six nuclear reactors with Westinghouse, a U.S. firm involved in energy-related projects, in 2016.
In addition to this, Modi and Trump launched the U.S.-India TRUST (“Transforming the Relationship Utilizing Strategic Technology”) initiative to enhance bilateral cooperation and promote the application of critical and emerging technologies, along with the INDUS Innovation, to expand partnerships and foster investments in space, energy, and other emerging technologies. Both sides also agreed to forward a “U.S.-India Roadmap on Accelerating AI Infrastructure” by the end of year.
The repeated mention of the Indo-Pacific, especially under the rubric of “multilateral cooperation” in the joint statement, highlights the continued importance both sides attach to cooperation in this critical region. With Trump set to visit India later this year for the QUAD summit, both sides agreed to activate new initiatives under the grouping and convene partners from the India-Middle East-Europe Corridor and the I2U2 Group to announce new initiatives. At a time when President Trump is rapidly withdrawing from international organizations and defunding key programs, the announcement of the bilateral forum, the Indian Ocean Strategic Venture, is a welcome development indicating the importance Washington attaches to India as a bulwark against China in the Indo-Pacific.
During the summit, Washington announced the extradition to India of Tahawwur Rana, a Pakistani-Canadian citizen linked to the terror attacks in Mumbai on November 26, 2008. The joint statement also mentions strengthening cooperation against terrorist threats from groups, including Al-Qa’ida, ISIS, Jaish-e-Mohammad, and Lashkar-e-Tayyiba and called on Pakistan to ensure that its “territory is not used to carry out cross-border terrorist attacks.”
Following Modi’s visit, the stage for a U.S-India “MEGA partnership” has been set. The visit yielded an aspirational agenda and hinted at a renewed vigor to operationalize this partnership, which has expanded exponentially and enjoys bipartisan support in the U.S. as a counter to China.
However, the omissions from the joint statement speak volumes. It indicates some of the short-term and long-term challenges which require urgent attention. Firstly, the statement makes no announcement on H-1B visas for skilled professionals, beyond a vague mention of “talent flow and movement of students, researchers and employees, [that] has mutually benefited both countries” in the joint statement.
With India accounting for 75 percent of all H-1B visas issued in 2020, the Trump administration’s somewhat erratic approach to the question of legal migrants has caused anxieties among overseas Indians. Notably, during Trump’s first term, the denial rate for H-1B visas skyrocketed to 24 percent in 2018 and new work visas were temporarily suspended in 2020.
While the question of illegal immigration was discussed, and Modi reiterated India’s position that it would take back immigrants who have entered the U.S. illegally, it is unclear if Modi raised concerns over the mistreatment of Indian immigrants, which has created a domestic uproar. If these issues are not handled correctly, domestic pressure is likely to reduce Modi’s flexibility to address Washington’s concerns and affect overall ties.
Secondly, notwithstanding the significance of the intention to negotiate a BTA, it is important to recognize that even if successful, it’s outcomes are a long way off. For several years now, high-level negotiations have been ongoing to arrive at a U.S.-India trade deal, with both sides coming close to signing a mini trade deal in 2020 under the first Trump administration. It is unclear how long-standing challenges of the fundamental incompatibility of Trump’s “America First” stance and Modi’s “Make in India” initiative will be addressed by the current administrations.
To arrive at a BTA, Washington will likely push India to further lower tariffs on U.S. products, especially on farm products. However, this might prove to be a risky move for New Delhi, as maintaining high import duties on sensitive agricultural commodities is crucial for protecting India’s self-sufficiency and safeguarding the food security of its population.
While India has been able to evade the direct tariff heat that hit Canada, Mexico, and China earlier this month, Modi was not able to secure tariff waivers for New Delhi from the recently raised U.S. tariffs on steel and aluminum imports, despite ongoing negotiations. No mention was made of possible sanctions waiver for work related to New Delhi’s port development project in Chabahar, which India was able to secure from the U.S. during the first Trump administration. Earlier on February 4, President Trump had signed a National Security Presidential Memorandum to start a “maximum pressure” campaign against Iran, which mentions that the U.S. Secretary of State “shall modify or rescind sanctions waivers, particularly those that provide Iran any degree of economic or financial relief, including those related to Iran’s Chabahar port project.” Meanwhile. New Delhi has reiterated its commitment to the project, despite these impending sanctions.
Finally, while there is a lot of optimism surrounding the “new” initiatives announced, it is important to recognize that some of them are not new, but simply rebranding of Biden-era programs. Both TRUST and INDUS Innovation follow from iCET (the initiative on critical and emerging technologies) and INDUS-X. Similarly, it remains to be seen how the Indian Ocean Strategic Venture will be different from the Indian Ocean Dialogue, which was inaugurated just a few months ago. This indicates that there will be some continuity with Biden-era programs, other initiatives, especially health-related and other social sector initiatives, are unlikely to be continued by the Trump administration.
Given the Trump administration’s efforts to remove or downplay references to the climate crisis within the U.S. government and its withdrawal from the Paris Agreement, it came as no surprise that clean energy and climate change were not mentioned during the meeting, even though they had been a key focus of bilateral relations during the Biden era.
It remains to be seen whether President Trump’s transactional approach to foreign relations complements his much-touted chemistry with President Modi. Overall, the visit was largely successful as it set out an ambitious agenda for bilateral ties very early into the Trump administration. On one hand, previous irritants such as India’s sketchy record on minority rights and relations with Russia impinging ties with the U.S. during the previous administration have dissolved, but other pressing issues remain. The future trajectory of this relationship will depend on aligning expectations from each other, and this summit seems to have provided a good start to recognize areas of convergence, while working on some divergences.
