Vice President JD Vance met with Indian Prime Minister Narendra Modi on Monday, as both countries work on a wide-ranging trade agreement expected to lower New Delhi’s trade deficit and provide a level playing field for American companies.
“The U.S. is India’s largest trading partner and the two countries are now holding negotiations aiming to seal a bilateral trade agreement this year. They have set an ambitious target of more than doubling their bilateral trade to $500 billion by 2030,” The Associated Press noted Tuesday. “If achieved, the trade deal could significantly enhance economic ties between the two countries and potentially strengthen diplomatic ties as well.”
If negotiations fail, India could face higher tariffs when President Trump’s three-month pause expires in mid-July. “Without an agreement, India faces the threat of a 26 per cent ‘reciprocal’ tariff on its exports to the US. Trump has paused the measure for 90 days so negotiations can take place,” the UK-based Financial Times noted.
New Delhi appears to be taking President Trump’s tariff ultimatum seriously, offering to open up key sectors of the economy for U.S companies. “Modi’s government is moving quickly to negotiate the deal, which will cover products ranging from food to ecommerce and cars,” the British newspaper added.
The Trump tariff hike isn’t all bad news for India. The country hopes to gain at China’s expense. “Apple and Samsung are shifting their production to India to counter higher US tariffs on imports from China and Vietnam,” The Times of India newspaper wrote April 7.
With India heavily dependent on Russian energy and military supplies, Vice President Vance wants the country to source its requirements from the U.S. — a viable way of reducing its huge trade deficit. The vice president “on Tuesday … called on India to give greater access to its markets, buy more American energy and defence hardware as he outlined the vision for stronger ties between the two countries,” the Indian newspaper Hindu reported.
Russia remains India’s biggest arms supplier. With Moscow facing U.S. and Western sanctions in the wake of the Ukraine war, India has emerged as the second largest purchaser of Russian energy after China, importing €49 billion (estimated $56 billion) worth of oil and gas from the sanctions-hit country in the first nine months of 2024.
Prime Minister Modi’s office in a statement talked of “significant progress in the negotiations for a mutually beneficial India-U.S. Bilateral Trade Agreement.“
India, America’s tenth-largest trading partner, has run up trade deficits for decades. “U.S. total goods trade with India is estimated at $129 billion in 2024, according to the Office of the U.S. Trade Representative. India’s surplus with the United States, reached $45.7 billion last year,” CNBC observed recently.
Ahead of Vance’s visit, U.S. Trade Representative Ambassador Jamieson Greer slammed India for “a serious lack of reciprocity in the trade relationship.”
Following Vance’s meeting with Modi, the two countries agreed to a “roadmap” for a bilateral trade deal set to be finalized this year, the weekly magazine India Today reported:
United States Vice President JD Vance on Tuesday announced that America and India have finalised the terms of reference for the trade negotiations. “I believe this is a vital step toward realising President Trump’s and Prime Minister Modi’s vision, because it sets a roadmap towards a final deal between our nations,” he said. (…)US Vice President JD Vance, during his visit to Jaipur, said that the Trump administration treated its trade partners on the basis of fairness and shared national interests. “Our administration seeks trade partners on the basis of fairness and shared national interests. We want to partner with people in countries who recognise the historic nature of the moment,” Vance said.
Under the news trade agreement, President Trump wants India to open up its growing online retail sector to U.S. players, a move resisted by successive Indian governments. “Trump administration intends to press India to give [U.S.] online retailers … full access to its $125bn ecommerce market as part of the planned trade deal,” the Reuters said Tuesday.
“The U.S. plans to push Prime Minister Narendra Modi’s government for a level playing field on e-commerce in wide-ranging talks on a U.S.-India trade agreement set to also cover sectors from food to cars,” the news agency added.
When it comes to trade, the Trump administration is employing both carrots and sticks, willing to reward countries like India if they remove trade barriers and lower deficits. According to the Financial Times, both countries “want to boost bilateral trade of goods and services to $500bn, more than double the current amount, by 2030.”
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