Modi-Trump G7 meet: Conciliatory signs from Trump, but his unpredictability is a challenge

How the ties plummeted

The first flashpoint was Operation Sindoor. Trump claimed he had brokered the ceasefire between India and Pakistan. However, in a tough phone call with Trump, Modi rejected the US President’s claims of any role. Pakistan, meanwhile, stepped up efforts to woo Trump and his family. It thanked him for the ceasefire and cut cryptocurrency and critical mineral deals with his family members.

The lowest point, arguably, came when the US imposed 50% tariffs on India in August — 25% were in response to Indian tariffs on US products and the rest was for buying Russian oil. This forced India to reduce its energy imports from Russia, though the US eventually issued a sanctions waiver.

In September, Trump raised the annual fee for H1-B visas to $100,000 — making it prohibitively expensive for tech companies to hire Indian professionals in the US. This month, a US judge struck down the fee, though the administration is expected to appeal in the Supreme Court.

India’s efforts

Though the Trump administration used economic leverage as a punitive measure against India, New Delhi kept working the phones and speaking to American interlocutors.

By February this year, India and the US arrived at a framework that would lead to a trade deal. By then, India’s imports from Russia had also dipped — a signal to Trump that it was adhering to the sanctions.

In the meantime, Delhi started engaging with Trump. Modi welcomed the US President’s efforts to bring in a ceasefire in the war in Gaza, and his efforts to end the war between Russia and Ukraine.

By the end of February, however, another war broke out — one started by the US and Israel against Iran.

The attack prompted Iran to effectively close the Strait of Hormuz, setting off a global energy shock. The drop in supply, rise in oil prices and inflation affected India’s energy security as well as economy.

In May, US Secretary of State Marco Rubio arrived in Delhi in an attempt to repair the damage caused to the bilateral relations.

But the recent killing of three Indian seafarers in the Gulf by the US navy created more tensions, exacerbated by Rubio’s response.

The Modi-Trump meeting

Keeping in mind this volatile context, the Trump-Modi bilateral meeting marked a significant moment. These are some of the takeaways from India’s larger engagement with the US over these months and the latest meeting.

First, Trump has ripped up the international system, and New Delhi is not immune to any actions he undertakes — either in his neighbourhood (Venezuela or Cuba) or far away (Iran). The war in West Asia has disrupted the Indian economy. But Trump’s actions in Venezuela have allowed India to import oil from the South American country after a hiatus.

Second, Trump may be mercurial and unpredictable, but understands the sensitivities of Indian government and its politics. So he was effusive about Modi, did not push back on the issue of seafarers’ deaths due to the US navy — as was done by Rubio — maintained his welcoming posture for skilled Indian professionals, and vowed security support for India in the face of threats.

Third, New Delhi’s assessment is that Trump is willing to manage China on his own, and doesn’t need any allies or like-minded partners like the Quad. The US President has reached out to his Chinese counterpart Xi Jinping, has promoted the concept of G2 (US and China), and is aware of Beijing’s through critical mineral leverage, AI progress and manufacturing prowess. So, India needs to engage with China as well as assert its redlines, with help from like-minded partners.

Fourth, India also understands that Trump needs to be managed for the next three years, and an openly confrontational approach or submissive behaviour doesn’t work. Modi’s approach — crediting him for peace efforts while working on a trade deal to limit tariffs — is the best possible strategy.

Fifth, as the US limits its access, New Delhi wants to keep its choices open — with Europe, Australia, Japan, Singapore, Gulf monarchies and other like-minded partners for capital, technology and destination for Indian students, workers and professionals.

Sixth, India and the US have had a difficult year. And the strategic trust that developed for the last two-and-half decades has taken a beating. New Delhi will hope that the same mistakes are not repeated and that Trump’s conciliatory statements are a signal to mend fences. Both sides will now have to work on its relationship to regain the lost trust.