Modi - Trump Deal: Is India Trapped?
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FEBRUARY 2025
The recent high-profile meeting between Indian Prime Minister Narendra Modi and U.S. President Donald Trump was anticipated to be a pivotal moment for both nations.
As two of the world's largest democracies and key geopolitical players, India and the United States have often found themselves aligning on several global issues.
However, upon closer examination of the agreements and joint statements that emerged from this meeting, concerns have arisen about whether India gained proportionate benefits or if it
found itself making concessions that may not serve its long-term interests.
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Indian students contribute approximately $8 billion annually to the U.S. economy
A Transactional Approach to Diplomacy?
What was expected to be a discussion on strategic partnership seemed more like a business negotiation, with India appearing to be on the back foot.
Key issues of concern for Indian citizens, such as visa restrictions for Indian students and IT professionals, trade tariffs, and concerns about deportation policies, were either sidelined or inadequately addressed.
Indian students contribute approximately $8 billion annually to the U.S. economy.
Despite this substantial economic input, longstanding issues like visa restrictions, challenging work conditions, and prolonged green card waiting periods remained unresolved.
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India has a 10 year deal for Russian crude at a discounted rate
Similarly, Indian IT professionals, who make significant contributions to the American economy, continue to face social security deductions that remain unreimbursed once they return to India.
These issues, which directly affect millions of Indians, were glaringly absent from the discussions.
Economic and Strategic Ramifications
One of the more contentious aspects of the deal revolves around energy imports. India has been diversifying its energy sources, including importing Russian oil at discounted rates.
However, the Trump-Modi discussions paved the way for increased American oil and gas exports to India, assumingly with higher costs.
This shift raises concerns about economic feasibility and the potential deterioration of India's long-standing energy partnership with Russia. India has a 10 year deal for Russian crude at a discounted rate.
India has got multiple trade partners for the import of oil and gas. Russia has significantly increased its share and currently dominates as crude oil supplier.
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One estimates that these jets through its lifetime will cost India about $1.2 trillion to maintain it
It is about 40% of the total India's crude oil imports.
Iraq and Saudi Arabia exports about 20% and 11% crude oil to India.
Before the US sanctions on Iran, India’s import of crude from Iran war substantial but currently it is negligible.
India's import of U.S. oil is about 4% and that is what the trump administration is targeting to increase to $25Bn (about Rs 200 Lakh Crore).
From a strategic standpoint, this realignment could impact India's position within BRICS also, where its relationship with Russia serves as a counterbalance to Chinese influence.
Russia holds special relationship with China and at times India can use Russia as friendship bridge to ease out tension with China.
Weakening these ties in favour of a transactional deal with the United States may not align with India's broader diplomatic and economic interests.
Defence and Technology Transfers: At What Cost?
On the defence front, the deal has significant implications. India has been co-developing the Su-57, a fifth-generation fighter jet, with Russia.
However, reports indicate that India is being coerced into purchasing F-35 fighter jets from the U.S. at a steep cost.
One estimates that these jets through its lifetime will cost India about $1.2 trillion to maintain it.
Ironically, both Trump and Elon Musk have previously criticized the F-35 program, raising questions about whether this investment aligns with India’s defence needs.
Can India afford each fighter jet for $80-100mn price tag? In rupee terms each would be in the range of Rs. 7200 to Rs.8600 crore.
Additionally, modifications to the Civil Liability Clause in India's nuclear agreements with the U.S. have raised concerns.
Previously, India had ensured that foreign companies operating nuclear plants in the country would be held accountable for damages in case of accidents.
However, under the revised terms, this clause has been weakened, potentially leaving India vulnerable in the event of future industrial disasters.
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Even the Europeans prefer the French or the Chinese, not US, for their nuclear power plants
The civil liability clause is important because India has already seen the world's worst industrial disaster in the form of 1984 Bhopal gas tragedy.
The ramification of this tragedy is still affecting few hundred thousand lives in the city of Bhopal.
Further, the American nuclear expertise is vintage as the last time a nuclear power plant was made in 1977.
US has 94 nuclear power plants and only one nuclear plant was made in the last decade that too was commissioned not because of a strategic need of energy but part up pending project.
Even the Europeans prefer the French or the Chinese, not US, for their nuclear power plants.
Hence that should not be counted as an area of expertise of the Americans.
Therefore, it makes a very weak argument for Indians to import nuclear power plant expertise from America.
In the growing awareness about the perils of nuclear power plant, Germany has started to dismantle its nuclear power stations.
Many other countries are weary about the nuclear energy after the Fukushima (Japan) Nuclear disaster, post earthquake Tsunami in 2011.
Trade Imbalances and Market Access
Trade agreements were another area where India appears to have made significant concessions.
While Trump reiterated his stance on “reciprocal tariffs,” India lowered duties on various American products, including luxury goods such as Harley-Davidson motorcycles and alcoholic beverages.
The tarrif on Harley-Davidson motorcycles was 150% and it is dropped to 50% by India.
These reductions, while beneficial to American exporters, do little to support India's domestic industries and manufacturing sector. India has already got huge two-Wheeler market catered by indigenous companies.
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This policy by the Indian government will jeopardise the “Make in India” and Atma Nirbhar Bharat strategy
Same is with alcoholic drinks market which are already overflowing by the Indian breweries, highly supported by the availability of cheap molasses from the sugarcane growing states.
The broader question remains: Why were no significant reciprocal benefits secured for Indian businesses and professionals in return?
At a time when India is pushing for self-reliance under the "Atmanirbhar Bharat" initiative, such tariff reductions seem counterproductive to bolstering Indian industries.
This policy by the Indian government will jeopardise the “Make in India” and Atma Nirbhar Bharat strategy. In the long run the countries skilled manpower will suffer.
A Diplomatic Success or a Missed Opportunity?
Beyond economic and strategic concerns, the optics of the visit also painted a stark contrast.
While Trump received a grand reception during his visit to India, Modi’s arrival in Washington was relatively subdued, lacking the usual diplomatic courtesies extended to key global leaders.
Such gestures, or the lack thereof, often signal the level of importance a host country assigns to a visiting leader.
Indian Prime Minister did not receive the warmest of the welcome which was much anticipated back home in India.
Also, the Indian media had created an artificial hype of the anticipated warmth in friendship of Mr. Modi and Donald Trump.
Despite the efforts of domestic media to portray the visit as a diplomatic success, the tangible benefits secured for India remain questionable.
If the goal of the engagement was to strengthen Indo-U.S. relations, it should have been on the basis of mutual gains, rather than disproportionate compromises.
India and the United States undeniably share many mutual interests, from counterterrorism cooperation to technological collaboration.
However, strategic partnerships should be based on equality, not one-sided concessions.
For a truly balanced and beneficial partnership, Indian leadership must assert its position more firmly in future negotiations, ensuring success of its own priorities.
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