FEB 14 – Despite the hype, Indian Prime Minister Narendra Modi’s first go to to Washington below Donald Trump’s second time period was a sober, business-first affair – unsurprising for a working go to, which lacks the pomp of a state go to.
Trump introduced expanded US navy gross sales to India from 2025, together with F-35 jets, together with elevated oil and gasoline exports to slender the commerce deficit. Both sides agreed to barter a commerce deal and finalise a brand new defence framework.
He additionally confirmed the US had permitted the extradition of Tahawwur Rana, a Chicago businessman accused of enjoying a job within the 2008 terror assault in Mumbai.
“That’s a lot of deliverables for an administration less than a month old,” Michael Kugelman of the Wilson Center’s South Asia Institute in Washington informed the BBC
“Overall, both sides seem comfortable continuing Biden-era collaborations, particularly in tech and defence, though many will be rebranded under Trump.”
Still, main challenges lie forward. Here are the important thing takeaways:
Did India dodge the reciprocal tax bullet?
Modi’s go to got here as Trump ordered that US buying and selling companions ought to face reciprocal tariffs – tit-for-tat import taxes to match comparable duties already charged by these international locations on American exports. He ordered advisers to draft broad new tariffs on US commerce companions, warning they might take impact by 1 April.
India enjoys a commerce surplus with the US, its prime buying and selling associate. India lower common tariffs from 13% to 11% in its federal price range in a bid to pre-empt Trump’s tariff strikes.
The jury is out on whether or not India seems to have dodged tariff shocks for now.
Ajay Srivastava, founding father of the Delhi-based suppose tank Global Trade Research Institute (GTRI), says he doesn’t see any “problems with tariffs”.
The most important purpose, he says, is that 75% of the US exports to India appeal to import taxes of lower than 5%.
“Trump points to extreme outlier tariffs like 150% on select items, but that’s not the norm. India has little reason to fear reciprocal tariffs,” Mr Srivastava informed the BBC.
Abhijit Das, former head of the Centre for WTO Studies on the Indian Institute of Foreign Trade, isn’t satisfied.
“The devil lies in the details. Reciprocal tariffs won’t just mirror India’s import taxes -other factors will come into play,” he informed the BBC.
Trump’s method might transcend import duties, factoring in worth added tax (VAT), non-tariff limitations and commerce restrictions. While India’s items and providers tax (GST) on imported items aligns with WTO guidelines, Trump should use it to justify larger tariffs.
A US authorities memo on reciprocal tariffs hints at this technique, citing prices to American companies from non-tariff limitations, subsidies and burdensome rules overseas. It additionally cites VAT and authorities procurement restrictions as non-tariff limitations.
Mr Das says the US is predicted to push for entry to India’s authorities procurement market, which is presently protected below WTO guidelines.
“This will hamper India’s ability to prioritise domestic producers, posing a direct challenge to the ‘Make in India’ initiative. This is certainly not good news for us.”
Mr Das means that India ought to counter Trump’s reciprocal tariff logic, significantly in agriculture the place the US imposes strict non-tariff limitations that prohibit Indian exports similar to stiff most residue limits on chemical substances.
He argues that for the reason that US “heavily subsidises” its farm sector, India ought to spotlight these subsidies to push again in opposition to American claims.
Tariffs alone might not assist bridge the commerce deficit between the 2 international locations. Defence and power purchases will go a way in addressing the deficit, consultants say.
Doubling US-India commerce to $500bn by 2030
The new $500bn (£400bn) commerce purpose goals to greater than double the $190bn commerce between the 2 international locations in 2023.
Modi and Trump dedicated to negotiating the primary section of a commerce settlement by autumn 2025. Talks will deal with market entry, tariff reductions and provide chain integration throughout items and providers.
“The announcement that the two sides will pursue a trade deal gives India an opportunity to negotiate for reduced tariffs on both sides. That would be a boon not only for the US-India relationship, but also for an Indian economy that’s sputtered in recent months,” says Mr Kugelman.
What is just not clear is what sort of commerce deal the each side might be aiming at.
“What is this trade agreement? Is it a full blown free trade agreement or is it a reciprocal tariff deal?” wonders Mr Srivastava.
Mr Das believes we’ll have to attend for particulars on the commerce settlement.
“It doesn’t necessarily mean a free trade deal – if that were the case, it would have been stated explicitly. It could simply involve tariff reductions on select products of mutual interest.”
Priyanka Kishore, principal economist on the Singapore-based consultancy agency, Asia Decoded, says $500bn is a “tall target but there are low hanging fruit we can immediately exploit”.
“For instance the US sanctions on Russian shadow fleet are soon going to kick in, so India can easily pivot to the US for more oil. This will not be too difficult.”
Trump mentioned on the joint press convention that the US would hopefully turn out to be India’s primary provider of oil and gasoline.
Multi-billion greenback US defence offers, together with fighter jets
India’s defence commerce with the US has surged from close to zero to $20 billion, making the US its third-largest arms provider.
While Russia stays India’s prime supply, its share has dropped from 62% to 34% (2017-2023) as India shifts towards US procurement.
In a significant announcement to deepen defence ties, Trump mentioned the US would enhance navy gear gross sales to India “by many billions of dollars starting this year” in the end paving the way in which to offering the F-35 stealth warplanes.
But this might be simpler mentioned than completed, say consultants.
“This sounds good, but it may be a case of putting the cart before the horse,” says Mr Kugelman.
Despite rising US arms gross sales to India, bureaucratic hurdles and export controls restrict the switch of delicate applied sciences, he says. The new defence framework introduced on the summit might assist tackle these challenges.
Also India isn’t “taking the F-35 offer seriously” as a result of excessive upkeep calls for, says strategic affairs skilled Ajai Shukla.
Shukla notes that US arms offers include challenges – personal corporations prioritise revenue over long-term partnerships.
Yet with delays and price overruns affecting a few of India’s arms offers with Russia, Delhi’s defence ties with the US look set to deepen.
ReutersModi meets Musk whilst Tesla’s India plans nonetheless in limbo
Modi met Tesla CEO Elon Musk to debate AI and rising tech, India’s overseas ministry mentioned.
It’s unclear in the event that they addressed Musk’s stalled plans for Starlink’s India launch or Tesla’s market entry.
Musk has pushed for direct spectrum allocation, clashing with Indian billionaire Mukesh Ambani, who favours auctions. His licence stays below assessment.
India can be courting Tesla to arrange a automotive manufacturing unit, chopping EV import taxes for automakers committing $500m and native manufacturing inside three years. Tesla has but to verify its plans.
ReutersTaking questions – a uncommon departure for Modi
In a uncommon transfer, Modi joined Trump at a press convention, answering two questions – on unlawful immigration and the US Department of Justice (DOJ) bribery expenses in opposition to the Adani Group.
Indian billionaire Gautam Adani, accused of shut ties with Modi, was charged with fraud within the US final November over an alleged $250m bribery scheme.
Modi mentioned he hadn’t mentioned the difficulty with Trump. On immigration, he acknowledged India was able to take again verified unlawful Indian migrants.
This was solely Modi’s third direct press Q&A in his nearly 11-year tenure as India’s prime minister. He has by no means held a solo press convention. In 2019 he sat beside then celebration president Amit Shah as Shah answered all of the questions and in 2023, he took simply two questions alongside former President Joe Biden.