Modi-Trump talks: Five key takeaways

Regardless of 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 fuel exports to slender the commerce deficit. Either side agreed to barter a commerce deal and finalise a brand new defence framework.

He additionally confirmed the US had accredited the extradition of Tahawwur Rana, a Chicago businessman accused of taking part in a job within the 2008 terror assault in Mumbai.

“That is a lot of deliverables for an administration lower than a month outdated,” Michael Kugelman of the Wilson Middle’s South Asia Institute in Washington advised the BBC

“Total, either side appear comfy persevering with Biden-era collaborations, significantly in tech and defence, although many might be rebranded below Trump.”

Nonetheless, main challenges lie forward. Listed here are the important thing takeaways:

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 related duties already charged by these nations 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 companion. India minimize 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 World Commerce Analysis Institute (GTRI), says he would not see any “issues with tariffs”.

The principle cause, he says, is that 75% of the US exports to India appeal to import taxes of lower than 5%.

“Trump factors to excessive outlier tariffs like 150% on choose objects, however that is not the norm. India has little cause to worry reciprocal tariffs,” Mr Srivastava advised the BBC.

Abhijit Das, former head of the Centre for WTO Research on the Indian Institute of Overseas Commerce, is not satisfied.

“The satan lies within the particulars. Reciprocal tariffs will not simply mirror India’s import taxes -other components will come into play,” he advised the BBC.

Trump’s strategy may transcend import duties, factoring in worth added tax (VAT), non-tariff boundaries and commerce restrictions. Whereas India’s items and companies tax (GST) on imported items aligns with WTO guidelines, Trump should still 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 boundaries, subsidies and burdensome rules overseas. It additionally cites VAT and authorities procurement restrictions as non-tariff boundaries.

Mr Das says the US is anticipated to push for entry to India’s authorities procurement market, which is presently protected below WTO guidelines.

“This can hamper India’s potential to prioritise home producers, posing a direct problem to the ‘Make in India’ initiative. That is definitely not excellent 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 boundaries that limit Indian exports similar to stiff most residue limits on chemical compounds.

He argues that for the reason that US “closely subsidises” its farm sector, India ought to spotlight these subsidies to push again towards American claims.

Tariffs alone might not assist bridge the commerce deficit between the 2 nations. Defence and vitality purchases will go a way in addressing the deficit, consultants say.

The brand new $500bn (£400bn) commerce purpose goals to greater than double the $190bn commerce between the 2 nations in 2023.

Modi and Trump dedicated to negotiating the primary part of a commerce settlement by autumn 2025. Talks will concentrate on market entry, tariff reductions and provide chain integration throughout items and companies.

“The announcement that the 2 sides will pursue a commerce deal offers India a possibility to barter for decreased tariffs on either side. That will be a boon not just for the US-India relationship, but additionally for an Indian economic system that is sputtered in latest months,” says Mr Kugelman.

What shouldn’t be clear is what sort of commerce deal the either side might be aiming at.

“What is that this commerce settlement? Is it a full blown free commerce settlement 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 would not essentially imply a free commerce deal – if that have been the case, it will have been said explicitly. It may merely contain tariff reductions on choose merchandise of mutual curiosity.”

Priyanka Kishore, principal economist on the Singapore-based consultancy agency, Asia Decoded, says $500bn is a “tall goal however there are low hanging fruit we are able to instantly exploit”.

“As an illustration the US sanctions on Russian shadow fleet are quickly going to kick in, so India can simply pivot to the US for extra oil. This is not going to be too tough.”

Trump stated on the joint press convention that the US would hopefully develop into India’s primary provider of oil and fuel.

India’s defence commerce with the US has surged from close to zero to $20 billion, making the US its third-largest arms provider.

Whereas 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 stated the US would improve navy tools gross sales to India “by many billions of {dollars} beginning this 12 months” finally paving the best way to offering the F-35 stealth warplanes.

However this might be simpler stated than finished, say consultants.

“This sounds good, however it might be a case of placing the cart earlier than the horse,” says Mr Kugelman.

Regardless of rising US arms gross sales to India, bureaucratic hurdles and export controls restrict the switch of delicate applied sciences, he says. The brand new defence framework introduced on the summit might assist tackle these challenges.

Additionally India is not “taking the F-35 provide significantly” resulting from excessive upkeep calls for, says strategic affairs skilled Ajai Shukla.

Shukla notes that US arms offers include challenges – non-public corporations prioritise revenue over long-term partnerships.

But with delays and value overruns affecting a few of India’s arms offers with Russia, Delhi’s defence ties with the US look set to deepen.

Modi met Tesla CEO Elon Musk to debate AI and rising tech, India’s overseas ministry stated.

It is 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 evaluate.

India can be courting Tesla to arrange a automotive manufacturing unit, slicing EV import taxes for automakers committing $500m and native manufacturing inside three years. Tesla has but to substantiate its plans.

In a uncommon transfer, Modi joined Trump at a press convention, answering two questions – on unlawful immigration and the US Division of Justice (DOJ) bribery expenses towards 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 stated he hadn’t mentioned the problem with Trump. On immigration, he said India was able to take again verified unlawful Indian migrants.

This was solely Modi’s third direct press Q&A in his virtually 11-year tenure as India’s prime minister. He has by no means held a solo press convention. In 2019 he sat beside then occasion president Amit Shah as Shah answered all of the questions and in 2023, he took simply two questions alongside former President Joe Biden.