India and US Reach Trade Deal Amid Diplomatic Rapprochement

According to a Bloomberg report, tasked with repairing fractured diplomatic ties, National Security Adviser Ajit Doval delivered a firm ultimatum to the Trump administration during a high-stakes meeting in Washington in September – India seeks a trade deal but refuses to be bullied. According to officials, the diplomatic push began in early September when National Security Adviser Ajit Doval travelled to Washington to meet US Secretary of State Marco Rubio . The visit came soon after Modi held a high-profile meeting with Russian President Vladimir Putin and Chinese President Xi Jinping in China. According to the report, the said meeting had heightened unease in Washington. During the meeting, Doval conveyed that India wanted to move beyond escalating tensions and resume trade negotiations. At the same time, he made clear New Delhi would not be pressured by Washington and could wait out the current US administration if necessary, Bloomberg reported. He also urged the US side to tone down public criticism so the relationship could stabilise. Relations had deteriorated sharply in August when Trump imposed tariffs of up to 50% on Indian goods and accused India of financing Russia’s war in Ukraine through oil purchases. The US president also publicly criticised India’s economic policies and tariff structure. Weeks after Doval’s visit, the first signs of easing emerged. Last year on September 16, Trump called Modi on his birthday and praised his leadership. Over the following months the two leaders spoke several more times as officials worked toward reducing trade barriers. Despite the public uncertainty, diplomatic engagement had intensified since late last year. Newly appointed US Ambassador to India Sergio Gor repeatedly described tensions as differences between “real friends” and promoted deeper cooperation. The Ambassador also invited India to join a US-led supply chain initiative known as Pax Silica. External Affairs Minister S Jaishankar also held talks in Washington covering trade, defence and critical minerals cooperation. Trump on Monday (February 2) announced via social media post that the two countries have reached a deal lowering tariffs on Indian exports to 18%. The White House shortly after the announcement also confirmed the removal of a separate 25% penalty linked to India’s Russian oil imports. In return, he said India agreed to expand purchases of US goods, lower import duties on American products and shift energy sourcing. The Indian government has not confirmed those details and neither side has released official documentation. The announcement surprised even some Indian officials involved in negotiations, who were unaware a final leader-level call had been scheduled, the report stated. For New Delhi, the broader approach has been to maintain strategic autonomy while preserving long-term partnership with the United States. India needs US technology, investment and military cooperation to counter China and support its goal of becoming a developed economy by 2047. According to Bloomberg quoting officials in India, “Trump was just a blip over that time frame and India needs to stay focused on doing what’s best over the long term.” At the same time, India has expanded ties elsewhere, hosting Putin in December and pursuing trade agreements with the European Union and the United Kingdom. Upcoming visits by leaders from Canada and Brazil are also part of efforts to diversify partnerships. Even so, the United States remains India’s largest export market, accounting for about one-fifth of shipments, particularly electronics and mobile phones. American firms have recently pledged tens of billions of dollars in investments in India’s technology sector, which tells about the economic stakes behind the diplomatic rapprochement.