A downturn in India-US ties, but all is not lost

Why in the News

Hopes that Donald Trump’s 2024 election victory would bring a golden age in India-US ties have given way to an overt downturn, driven by tariffs, migration curbs and US warmth towards Pakistan. Beneath the strain, trade, defence and technology cooperation keep growing, so the relationship retains a base for recovery.

What did India expect from Trump’s second term?

1. A long-built partnership: The relationship had been built assiduously over 25 years, and the US was once described as India’s “natural ally”.
2. The Compact agenda: During the Prime Minister’s US visit in February 2025, the two sides set an ambitious agenda under the US-India COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce and Technology).
3. Sectors covered: The agenda spanned defence, trade, critical and emerging technologies, nuclear energy, critical minerals, space and Indo-Pacific affairs.
4. The takeaway: Trump’s brinkmanship, pushing disputes to the edge to extract concessions, has turned this long-built partnership into one marked by an enormous trust deficit.

What has soured the ties?

1. Weaponised trade: The US has resorted to an unprecedented weaponisation of trade, using tariffs as pressure. Eg. Harsh tariffs on India for its energy imports from Russia.
2. Pakistan tilt: Washington has shown unexplained warmth towards Pakistan.
3. Migration curbs: Republican focus on immigration has hit Indians on H-1B visas (US work visas for skilled professionals). The US Vice President called H-1B holders “indentured servants”.
4. Public mood: The result is growing unease and distrust in India, with little sympathy for Trump before the US midterms of November 3.

Why is US pressure over Russian oil seen as a double standard?

1. Energy shock: The US war against Iran disrupted critical energy routes such as the Strait of Hormuz and plunged the world into an energy crisis. Middle East oil output remains down.
2. Global spillover: China’s scramble for oil squeezed markets further, and soaring inflation drove protests in several European cities.
3. Imports from Russia: India avoided such a crisis by importing energy for its 1.4 billion people from Russia and others. The US Congress and the White House seek to punish it for this.
4. Unequal treatment: The US threatened India with 100% punitive tariffs. Its European allies got waivers and exemptions.
5. US-Russia deal: The US itself agreed this month to import 36 million barrels of Russian diesel to lower domestic fuel prices.

What keeps the relationship on track?

1. Trade growth: Bilateral trade grew 12% last year to reach $240 billion.
2. Investment pledges: Major American artificial intelligence (AI) companies have pledged close to $70 billion of investment in India. Micron opened its first chip assembly and test facility in India on the day the US attacked Iran.
3. Strategic cooperation: The defence partnership is robust, and cooperation is growing in space, critical technologies and minerals, and intelligence-sharing.
4. Trade target: The US Ambassador to India targets $500 billion in bilateral trade by 2030.

Challenges

1. Tariff threats: Punitive tariff threats over Russian oil force India to weigh energy security against access to the US market.
2. Hyphenation with Pakistan: US warmth to Pakistan revives fears that Washington treats India and Pakistan alike. Eg. US claims of stopping Operation Sindoor.
3. Diaspora under strain: Visa curbs and racist outbursts hurt the Indian diaspora, long a bridge between the two countries.

Way Forward

1. End weaponisation: India should press the Prime Minister’s position that the “weaponisation of trade, technology and sea routes” must stop.
2. Full trade agreement: Both sides should turn the interim trade arrangement into a full bilateral trade agreement to remove tariff uncertainty.
3. Ring-fence cooperation: Defence, technology and intelligence cooperation should be shielded from trade disputes.

Conclusion

India-US ties now run on two tracks, with trade and migration disputes on the surface and growing defence, technology and investment links underneath. The midterm verdict will show whether Washington’s pressure eases enough for the second track to set the tone.

India-US Relations

1. Defence foundations: Four foundational agreements on military information security, logistics, secure communications and geospatial data (GSOMIA, LEMOA, COMCASA and BECA) allow the two militaries to operate together.
2. Defence framework: Under the COMPACT, a 10-year Defence Framework expands cooperation, including co-production of Javelin anti-tank guided missiles.
3. Technology partnership: The Initiative on Critical and Emerging Technologies (iCET) has been rebranded as TRUST (Transforming the Relationship Utilizing Strategic Technology), covering semiconductors, AI and quantum computing.
4. Interim trade deal: An interim trade deal cut effective US tariffs on Indian goods from 50% to 18%.

Matching Previous Year Question

“[2010] In the context of bilateral trade negotiations between India and European Union, what is the difference between European commission and European Council? 1. European Commission represents the EU in trade negotiations whereas European Council participated in the legislation of matters pertaining to economic policies of the European Union 2. European Commission comprises the heads of State of govt. of member countries whereas the European Council comprises of the persons nominated by European Parliament Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2 ANSWER: (d)”