Indian Prime Minister Narendra Modi had been banking on a series of concessions before his meeting with U.S. President Donald Trump to maintain favorable ties with Washington, especially after weeks of tariff threats.
However, these efforts fell short.
As Modi heads back to New Delhi, he faces the looming prospect of increased duties on Indian exports and heightened pressure to purchase more American products—ranging from energy to advanced U.S. weapons systems. The meeting highlighted that the warm rapport the two leaders shared during Trump’s first term has its limits.
The discussions marked the first official meeting between Modi and Trump since 2020 and underscored Trump’s determination to revamp trade relationships with all nations, including close U.S. allies. Hours before their meeting, Trump announced that the U.S. would begin imposing “reciprocal” tariffs. He also openly criticized India’s trade policies while standing alongside Modi at a press conference.
“India has been to us just about the highest-tariffed nation in the world,” Trump said at the White House, with Modi standing beside him. “Whatever India charges, we’re charging them.”
Indian officials familiar with the meeting emphasized that it was not entirely negative. While India is waiting for details on the reciprocal tariffs, officials noted that an agreement to pursue a bilateral trade pact provides a platform for negotiation. They spoke on the condition of anonymity due to the sensitive nature of the discussions.
Modi was one of the earliest foreign leaders to visit Trump, joining the ranks of the prime ministers of Japan and Israel. The visit followed years of strengthening ties between India and the U.S., as Washington has strategically engaged India as a counterbalance to China’s growing influence in the region.
Several U.S. corporations, including Apple Inc. and Starbucks Corp., have significantly expanded their operations in India, tapping into the country’s growing consumer market while seeking to diversify away from Chinese supply chains.
Even during Trump’s first term, when he and Modi had a friendly rapport, India’s tariff policies remained a recurring point of contention. Now, with Trump’s second term underway, Modi has taken a more flexible stance, reducing import tariffs on various goods, including Harley-Davidson Inc. motorcycles.
Further demonstrating its willingness to accommodate U.S. demands, New Delhi announced on Thursday a reduction in taxes on American bourbon, cutting the rate from 150% to 100%—a key demand from Washington.
A senior U.S. official, speaking to Bloomberg News anonymously, described these steps as minor but welcomed. However, it was evident that Modi left Washington with a list of further actions to take, as Trump underscored his intent to reduce the U.S.’s $41 billion trade deficit with India.
“We believe that India still remains in Trump’s line of fire on reciprocal tariffs, even as the two countries have reiterated their strategic partnership,” said Sonal Varma, chief economist for India at Nomura Singapore Ltd.
India’s Ministry of External Affairs and Finance Ministry did not immediately respond to requests for further clarification.
Increased U.S. Defense Sales on the Horizon
Among India’s most notable commitments was its pledge to increase purchases of American energy and military equipment. India currently relies primarily on Russia for its defense needs and energy supplies, but Washington has long sought to reduce Moscow’s influence in these sectors.
In response, Trump announced that the U.S. would offer India the opportunity to purchase Lockheed Martin Corp.’s F-35 fighter jets, further strengthening defense cooperation between the two countries. However, any such deal faces hurdles due to the jet’s exorbitant cost and concerns about technology security, given India’s deep defense ties with Russia.
“The timeframe for the F-35 sale remains unclear, but it’s clearly something Trump will push hard given the revenue that the U.S. can draw from selling such an expensive system,” said Michael Kugelman, director at the South Asia Institute of the Wilson Center.
Despite these defense discussions, Modi did not secure any definitive commitment from Trump regarding the continuation of the H-1B visa program, which facilitates legal immigration for high-skilled Indian workers to the U.S. This program is a key concern for India’s technology sector. However, Modi did express openness to repatriating undocumented Indian migrants from the U.S., a stance that has drawn political criticism back home.
One topic that was notably absent from the discussions was the ongoing legal troubles of Indian billionaire Gautam Adani, who has been indicted in the U.S. for allegedly paying hundreds of millions of dollars in bribes to Indian government officials. Adani, a close ally of Modi, has denied the allegations.
“Personal Matters” Off the Table
“When it comes to such personal matters, two leaders of two countries will not get together on the topic and discuss anything on an individual matter,” Modi stated during the press conference.
Despite their disagreements, Modi and Trump concluded their meeting on a positive note by setting ambitious goals for future cooperation. Both leaders committed to expanding bilateral trade to $500 billion by 2030, a significant increase from $126.6 billion in 2023. Additionally, they reaffirmed their commitment to deepening defense and technological collaboration.
However, the discrepancy between India’s tariffs on U.S. imports and America’s relatively lower duties remains a critical sticking point. This imbalance puts India in a weaker negotiating position when discussing a comprehensive trade deal with the U.S., according to Shumita Deveshwar, chief India economist at GlobalData.TS Lombard.
“There are more concessions to be made because, for us, the U.S. is a far bigger market than India is for the U.S.,” she noted. “We do come from a position of disadvantage into these talks.”
As Modi returns to India, his government must now navigate the next steps in trade negotiations, balancing Washington’s demands while safeguarding India’s economic interests.