As Indian Prime Minister Modi 3.0 meets President Trump 2.0 there are several challenges in the bilateral ties where Modi’s Chanakya Niti will have to seek solutions against an unpredictable Trump. This visit is likely to cover a lot of ground, including discussions on trade, investment, defence, and energy partnerships. Trump’s narrative of MAGA (Make America Great Again) revolves around ultra-nationalism centred around anti-migrant rhetoric and trade war. Yet India’s prominence in shaping future geopolitics with American centrality cannot be ignored. Each side will demand concessions on every contentious issue to reach an acceptable solution. Both leaders with hyper-nationalism and strong ideologies will need to add impetus to the Indo-US strategic partnership for mutual benefit.
Bridging the Trade Deficit: A Thorny Agenda
Trump, trade and tariffs are the new weapons that targeted Mexico, Canada, and China. They remain the damocles sword and a source of tension in U.S.-India relations. Though India was excluded, higher tariffs on Indian exports dangle as much as the threat to impose 100% tariffs on BRICS nations, including India, should they undermine the US dollar.
Trade tensions have been a persistent concern In the fiscal year 2023-24, bilateral trade stood at $118 billion, with India’s trade surplus reaching $32 billion, a figure that swelled to $45.6 billion in 2024. President Trump has repeatedly criticized India’s high tariffs and the significant trade surplus it enjoys over the United States.
To address these concerns, India has signalled tariff reductions on high-end U.S. automobiles and motorbikes, benefiting companies like Harley-Davidson and Tesla. The Indian government’s 2025 budget, presented by Finance Minister Nirmala Sitharaman, hinted at further duty cuts, suggesting a strategic effort to assuage Trump’s demands. Defence equipment imports from the US are also likely to grow to bridge the US trade deficit, induct new technologies and lessen dependence on Russia. India could also buy more crude oil and LNG from the US.
India’s Commerce Minister, Piyush Goyal, recently said that India is ready to give American products a fair deal on tariffs, as long as American markets also open up fairly for Indian exports. We might see a mini-trade agreement that zeros in on lowering import taxes on American-made electronics, medical gear, and chemicals. In return, India would push for fewer restrictions when exporting pharmaceuticals, IT services, and textiles to the US. The U.S. demands in turn will demand safeguards for American IPR and a more transparent regulatory framework.
Geopolitical Factors: Managing Relations with Russia, China, and Iran
India’s long-standing strategic partnership with Russia and its rivalry cum economic linkages with China adds complexities to the India-U.S. trade relations. India has sustained its defence and energy cooperation with Russia, with the purchase of S-400 missile systems and importing of Russian crude oil at discounted prices despite the threat of American sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA).
The geopolitical reality is that both the United States and India have a common stake in countering China’s belligerence, and growing economic and military influence in the Indo-Pacific region. India thus plays a crucial role as a member of the Quad alliance and building stronger economic bonds which helps the U.S. to balance out China’s dominance in global supply chains. Washington would seek to reduce India’s dependence on Chinese imports, particularly in areas like critical minerals, semiconductors, and telecom through ties with the US.
India’s trade relations with Iran remain another irritant for the US. India has seen Iran as a key source of energy and a crucial partner for connectivity initiatives into Afghanistan and Central Asian Republics, and thus the strategic importance of Chabahar Port. U.S. sanctions on Iran have complicated India’s engagement, forcing it to cut oil imports significantly. Modi’s visit presents an opportunity to negotiate waivers or relaxed sanctions that would allow India to trade with Iran, particularly in energy and infrastructure projects. In exchange, Washington may seek stronger Indian alignment on countering Iranian influence in the Middle East.
Defence and Energy Cooperation: Strategic Ties
Defence has long been a cornerstone of the US-India relationship. Over the last two decades, India has become a major customer of American military equipment. During Trump’s first term, for instance, India inked several large defence deals including the Seahawk helicopters. India hopes to buy more C-130 Hercules transport planes, P-8I maritime patrol aircraft and Predator drones from the US to boost its defence capabilities.
Energy cooperation is also shaping up high on the agenda. Under Trump’s first term, India started buying American liquefied natural gas (LNG) and crude oil, broadening its energy sources. With Trump pushing for more US energy production, India could purchase American fossil fuels. At the same time, they could seek cooperation on nuclear energy and renewable energy projects, like solar and hydrogen.
India needs a firm defence pact with the US to keep China at bay and meet the threat from terrorists based in Pakistan. In July 2024, when Secretary of State Marco Rubio was a Senator, he presented a bill– the “United States-India Defence Cooperation Act”. The Act is yet to be passed. The visit could likely cement a stronger India-US defence relationship. In turn, Trump will demand reciprocal commitments from Modi on America’s defence interests vis-vis-vis China, which has its fallouts of nudging China, whose economy is five times India’s.
Unlocking the Potential of Civil Nuclear Partnership
Even though India and the U.S. signed a historic civil nuclear deal back in 2008, there has been limited collaboration in this field. Some obstacles like US concerns under India’s Civil Nuclear Liability Law and U.S. restrictions on Indian nuclear entities, have impacted outcomes. Yet the recent move to take the Bhabha Atomic Research Centre (BARC) and other Indian groups off the U.S. Entities List shows a fresh start in their relationship. The US will seek to amend liability laws to pave the way for American companies to participate in India’s nuclear energy expansion.
Immigration and Deportation: A Potential Sticking Point
Apart from discussions on trade and investment, Modi’s upcoming visit is anticipated to delve into sensitive immigration issues. The recent crude manner of deportation of more than 100 Indian citizens from the U.S., with shackles in a military aircraft, has infuriated India. India needs to suggest a more formalized and respectful deportation procedure. Correspondingly, India is also expected to urge the U.S. to keep open opportunities for skilled Indian professionals and students through the H-1B visa scheme, which has been advantageous to numerous Indian IT specialists.
A Pragmatic Approach to Bilateral Relations
Modi’s visit to the US is of strategic importance for the US-India relationship and a shared vision of geopolitics. Trump 2.0 firm position on trade and deportation certainly poses challenges, but both countries understand the strategic linkages of this relationship. Modi hopes to find a way through Trump’s often unpredictable approach by offering carefully considered concessions in areas like trade, defence, and energy, all while setting the stage for India’s long-term benefits.
