US President Donald Trump’s recent policy pronouncements towards India have sent ripples across the political, economic and strategic firmament no less than China’s actions in Galwan in 2020.
Today, India is dealing with uncertainty in relations with both the US and China. It is ironic that China is now speaking out in support of India’s strategic autonomy. Pakistan, meanwhile, has struck up a new relationship with Trump, nominating him for the Nobel Peace Prize, and offering deals in crypto currency and critical mineral assets.
Prime Minister Narendra Modi has expressed his firm resolve to protect the interests of Indian farmers and others dependent on the dairy and fisheries sectors. Much is at stake in a vital bilateral partnership. The US is India’s largest trading partner. Bilateral trade touched $131.84 billion in 2024-2025 with India enjoying a trade surplus of $41.18 billion. India’s exports to the US account for approximately 20 per cent of its total. Eighty per cent of this is produced by MSMEs. The whiplash effect could affect sensitive sectors of the Indian economy. The EU, with stricter quality standards, is not an alternative.
Remittances from the Indian diaspora in the US account for 30 per cent of the total of $135 billion. If work visas for Indians are targeted next, remittances will drop sharply. Given that the service sector accounts for over 50 per cent of India’s GDP, any downsizing would result in significant layoffs.
The number of student visas issued by the US had decreased substantially even before the 50 per cent tariffs were announced. Noticeably, there was a 44 per cent drop in F-1 visas for Indian students in the first half of 2025 compared to the first half of 2024. It could deprive those with a STEM background from accessing high-tech education. The US benefits from the $12-17 billion spent by Indian students annually.
Defence and security cooperation has burgeoned in recent years following the conclusion of an array of foundational agreements such as LEMOA, COMCASA and BECA. The Security of Supply Agreement (SOSA) has also been concluded. A finalisation of Reciprocal Defence Procurement (RDP) would elevate ties to the next level. The two sides conduct a large number of joint exercises. Military hardware imported from the US boosts India’s defence capabilities, particularly when its military-industrial complex is still maturing. US analysts aver that India has overestimated its global influence and that India cannot deter China without a tandem with the US. One must also carefully examine the fallout of the recent contretemps on the renewal of the 10-year Indo-US Defence Framework Agreement.
Both India and the US have invested considerable political capital in deepening multi-dimensional engagement. Yet, the points of friction are self-apparent.
India’s emphasis on multipolarity is clashing today with Trump’s desire to maintain the US’s global pre-eminence. The US needs to appreciate that for India, multipolarity implies an Asia without domination. The “Make in India” programme does not contradict the MAGA push for onshoring because manufacturing costs are not comparable. India’s firm commitment to “strategic autonomy” rubs up against US efforts to reset the terms of its global engagement.
US demands for access to India’s agriculture and dairy sectors will impact the livelihood of vulnerable sections of the Indian population. Oil, on the other hand, is a fungible product. It should be relatively easier for India to reduce its offtake of Russian oil, as long as the alternatives are broadly competitive. The share of Russian arms in India’s procurement has come down from nearly 80 per cent to about 34 per cent. Legacy issues, however, make it difficult for India to shun Moscow altogether. India will also have to avoid creating new dependencies. As for being part of BRICS, it is ironic that a democracy like India has been targeted even though it has always stood for moderation in that grouping.
Earlier this year, the two sides unveiled fresh initiatives such as the US-India COMPACT (Catalysing Opportunities for Military Partnership, Accelerated Commerce and Technology) for the 21st Century and TRUST (Transforming the Relationship Utilising Strategic Technology). The challenge is to preserve such collaboration despite Trump’s techno-nationalism and the ruckus created by punitive tariffs. There is also the matter of India’s digital and data sovereignty versus US tech dominance.
Trump is keen to claim credit for the May 10 India-Pakistan ceasefire. At that time, many countries were following the military hostilities with concern, the US among them. A few well-wishers may have urged Pakistan to approach India for a ceasefire through established military channels, as required by India. This is well appreciated, but it is not tantamount to mediation, on which India has a longstanding and principled position. One may recall that former President Bill Clinton had put pressure on Pakistan during the Kargil War, but that was not mediation.
Where does that leave the Quadrilateral Security Dialogue (Quad)? There have been calls for India to step up its participation in the Quad’s activities, including in the South China Sea. India has a strong commitment to the four-way alliance. The Indian Navy has recently carried out joint naval exercises with the Philippines in the South China Sea.
The bilateral kerfuffle has reached “high noon” proportions but there need not be any showdown. India and the US must engage at multiple levels to preserve the gains made so far. A mutually acceptable trade deal could pave the way for an enduring partnership in the interest of peace and security in the Indo-Pacific.
The author, a former ambassador, is currently director general of the Manohar Parrikar Institute for Defence Studies and Analyses. Views are personal
