Modi-Trump Meeting: Trade, Tariffs, and Defence Take Center Stage

Indian Prime Minister Narendra Modi’s first visit to Washington under Donald Trump’s second term was a business-first affair, marked by major trade and defense announcements. While it lacked the grandeur of a state visit, it delivered significant policy shifts that could shape US-India relations in the years ahead.

Key Announcements and Takeaways

1. Expanding Trade and Military Sales

• Military Deals: Trump confirmed that US military sales to India will expand from 2025, including discussions on F-35 fighter jets and increased energy exports to help narrow the trade deficit.
• Extradition: The US approved the extradition of Tahawwur Rana, accused of involvement in the 2008 Mumbai attacks.
• Biden-Era Policies Continue: Despite Trump’s “America First” stance, collaborations in technology and defense from Biden’s presidency will continue, albeit rebranded under Trump.

2. Did India Dodge Trump’s Tariff Policies?

• Trump has ordered reciprocal tariffs on trade partners, which could take effect by April 1.
• India has cut tariffs from 13% to 11%, possibly in anticipation of Trump’s moves.
• Experts are divided:
  • Some believe India won’t face major tariff shocks, as 75% of US exports to India face import duties below 5%.
  • Others warn that Trump could look beyond tariffs, targeting VAT, subsidies, and non-tariff barriers to justify higher duties.
  • India’s “Make in India” initiative could be challenged if the US demands access to India’s government procurement sector.
  • Indian policymakers are advised to push back by highlighting US farm subsidies and non-tariff barriers on Indian agricultural exports.

3. Doubling US-India Trade to $500 Billion by 2030

• New Target: Modi and Trump aim to more than double trade from $190 billion (2023) to $500 billion (2030).
• Trade Agreement: Both sides plan to negotiate a trade deal by autumn 2025, focusing on:
  • Market access
  • Tariff reductions
  • Supply chain integration
• However, uncertainty remains:
  • Will this be a full free trade agreement or just select tariff adjustments?
  • Experts suggest it may focus on specific sectors rather than an all-encompassing deal.

4. Strengthening US-India Defense Ties

• India’s defense trade with the US has grown from near zero to $20 billion, making the US its third-largest arms supplier.
• Major arms deals announced:
  • Multi-billion dollar purchases of US military equipment.
  • Discussions on acquiring F-35 stealth jets—though India remains cautious due to high maintenance costs.
  • Challenges ahead: Bureaucratic hurdles and export controls may limit sensitive technology transfers.

5. Modi Meets Musk: Tesla and Starlink Uncertainties

• Modi met Elon Musk to discuss AI and emerging technology.
• Unresolved issues:
  • Tesla’s India market entry remains uncertain despite India cutting EV import duties for automakers committing to local production.
  • Starlink’s India launch is still under review due to regulatory clashes with Indian billionaire Mukesh Ambani, who favors spectrum auctions over direct allocation.

6. Modi’s Rare Press Conference Appearance

• Modi joined Trump at a press conference—only his third direct Q&A session in nearly 11 years as PM.
• Topics addressed:
  • Illegal Immigration: India is ready to take back verified illegal Indian migrants from the US.
  • Adani Group Controversy: Modi denied discussing the US fraud charges against Gautam Adani, his close ally.

Final Thoughts

While the visit lacked the pageantry of a state visit, it delivered concrete agreements on trade, tariffs, defense, and energy. However, challenges remain, particularly on tariffs, defense procurement hurdles, and trade negotiations.

With Trump’s unpredictable stance on trade and India’s evolving economic priorities, the next few years will determine whether these agreements translate into lasting strategic gains.