Following a recent phone conversation between President Trump and Prime Minister Modi, there was extensive media coverage in both India and abroad, speculating on the possible strengthening of Indo-US relations. Now, Trump has invited Modi to the White House next week. What is this upcoming meeting, finalised shortly before the deportation of 104 Indians, indicative of?
The readout of the call from the White House said, “The President emphasised the importance of India increasing its procurement of American-made security equipment and moving toward a fair bilateral trading relationship.” Sure, India can increase its defence acquisition from the US as it has done so in the last few years, but the case for building a foundational relationship calls for cooperation that extends beyond mere arms deals.
If we take a look at the Indian readout, it talks about “advancing the bilateral Comprehensive Global Strategic Partnership including in the areas of technology, trade, investment, energy and defence”, in that order. India views this relationship not merely as transactional but as transformative, requiring long-term, trust-rich and deeply engaged interactions.
In September 2024, my colleagues at the Takshashila Institution, along with the Hudson Institute, wrote a report detailing recommendations on how India and the US can take their economic ties to the next level, structured around four main pillars – trade and investment, ideas and human capital, technology, methods and mechanisms.
Amid global anticipation of new tariff announcements and President Trump's labelling of India as a "tariff abuser," it is crucial for India to prioritise its trade ties. Although the Production-Linked Incentive (PLI) scheme was launched to promote manufacturing in key sectors such as electronics, pharmaceuticals, and textiles, there is a persuasive argument for India to reconsider the extent of its reliance on such subsidies.
India would derive greater benefits from reducing import duties, de-emphasizing industrial policy and investing in infrastructure. As businesses and governments strive to de-risk supply chains, reducing regulatory uncertainties by building predictable and transparent regulatory systems would strengthen US-India trade and business relations. Furthermore, Indian MSMEs have immense potential to expand their presence on American e-commerce platforms, thereby boosting exports.
Secondly, on human capital, India should not be overly concerned with the US issues surrounding illegal immigration. According to statistics by the US Department of Homeland Security, the unauthorised immigrant population from India has been declining since 2018, dropping by more than 50%, from 480,000 in 2018 to 220,000 in 2022. Moreover, India has already expressed its readiness to repatriate any undocumented citizens from around the globe and is actively cooperating with the US on the issue.
Instead, India’s focus must be on enhancing talent and knowledge exchanges. It can attract top global talent and high-performing companies by improving the liveability and appeal of its cities. Rather than simply inviting American universities to establish campuses in India, New Delhi should consider mutually beneficial initiatives like reciprocal study programs, which would facilitate the legal migration of skilled workers and meet labour market demands in both nations.
Thirdly, India and the United States should resolve disagreements over regulatory barriers and intellectual property rights. New Delhi and Washington need to prioritise cooperation in emerging technologies, such as artificial intelligence, synthetic biology and make efforts to update regulatory frameworks.
Recently, the US imposed export controls on chips, exempting 18 of its closest allies from these restrictions. However, India was categorised differently, facing limitations on the amount of computing power it can import from American companies. This situation raises some questions about the current state of technological collaboration between the two nations. Why was India placed in a different group, and what steps can it take to be considered a top-tier partner akin to those in the first category?
This is where the exchange of methods and mechanisms becomes crucial. This constitutes focusing on the spaces of shared interests and values through strategic dialogues and informal diplomacy initiatives, such as CEO summits. Further, with Trump's general disdain for international law and the resulting diminished role of the US in global governance, there is an opportunity for India to step up its leadership on the world stage. Given the enduring influence of the US, it is imperative for India to engage more actively within multilateral organisations such as the United Nations and the G20.
While trade interests between India and the US often diverge, strategic cooperation can maintain the resilience of their bilateral relationship, helping to possibly transcend trade disagreements. India is already the world’s leading arms importer. Through American support and technical assistance, it can enhance its domestic defence manufacturing capabilities, relying less on Russia than it has in the past. Also, the establishment of shared standards could increase Washington's comfort in transferring both dual-use and high-value benign systems to India.
Warm telephonic conversations and hugs aside, if Modi and Trump really want to catalyse this partnership, they must put promises to paper in every meeting going ahead, starting with their anticipated rendezvous in February.
(The author is a Research Analyst at the Takshashila Institution)