There’s a steady flow of top U.S. officials visiting India these days. Tulsi Gabbard, the new U.S. as Director of National Intelligence and an old friend of India visited on 17-18 March as part of a broader Indo-Pacific tour. Now it’s U.S. Vice President JD Vance, who is expected on April 21, to discuss the issue of trade. He may or may not be joined by other high-ranking officials such as National Security Advisor Michael Waltz and Defence Secretary Pete Hegseth. Vance will meet Prime Minister Narendra Modi, and talk trade, an issue of high sensitivity.
This visit presents a critical opportunity for India to convey a clear message to the U.S. administration that it will not be agreeing to any trade agreements with Washington that do not offer genuine mutual benefit. This stance reflects India’s commitment to protecting its economic interests while navigating the complexities of international trade relationships, which also includes others, mainly the European Union (EU) and the U.K.
For India, the current round of trade talks is déjà vu, reminiscent of U.S. President Donald Trump’s first term when India was encouraged to finalize a trade deal focused on goods. During those negotiations, progress was hindered by the contentious issue of granting the U.S. greater access to the Indian market, especially in the sectors of agriculture and dairy, which are deeply intertwined with both the nations’ political landscape.
In 2020 this issue not only stalled progress in talks with the U.S. but has also been a significant roadblock in potential trade agreements with the EU and the U.K., even the Regional Comprehensive Economic Partnership (RCEP) with Asia. Australia worked around it by doing a two-part trade agreement (Economic Cooperation and Trade Agreement)[1] in 2022, leaving the difficult agriculture and dairy portion to be signed three years later in the upcoming Comprehensive Economic Cooperation Agreement.
Will the same challenge once again become a sticking point in the bilateral negotiations? Vance, who previously expressed his worldview frankly at the Munich Security Conference in February 2025, alarming many of the U.S.’ traditional allies, is expected to be equally blunt and direct with India on tariffs and the proposed bilateral trade agreement (BTA).
Trump’s ‘Liberation Day’ wide-ranging tariffs on April 2, 2025, is now in a temporary 90-day reprieve, except for China where tariffs on each other have soared to abnormal levels. A full-blown trade and tariff conflict between Washington and Beijing is on-going, and worries of another global economic recession, potentially worse than the 2008 financial meltdown – is keeping countries on tenterhooks.
In this midst, India has opted for a position of strategic silence, all the while discreetly lowering tariffs on select high-end, very American products like bourbon whiskey and Harley Davidson motorcycles. Prime Minister Narendra Modi is optimistic that the ongoing BTA negotiations will address Trump’s grievances regarding import tariffs by India, labelling the country – not unfairly – as a “tariff king” for its elevated tariff rates.
This has forced India to take trade seriously, and the country is now stepping into the global trade regime. Modi and Trump have set a decisive deadline for concluding negotiations by August or September. Similarly, a target of December 2025 has been set for the EU-India trade agreement by Modi and European Commission President Ursula von der Leyen.
This requires a clarity in messaging from India. This has not been forthcoming. At a public event in New Delhi on 11 March, External Affairs Minister S. Jaishankar said trade negotiations have proved to be “protracted processes” in the past but “If we can focus on these three big negotiations, we have underway with the United States, with the EU and UK, if these could really work out for us in this year, we would be in a very different position.” He added that “This time around, we are certainly geared up for a very high degree of urgency. We see a window here. We want to seize that window. Our trade teams are really charged up.”[2]
On the other hand, Commerce and Industry Minister Piyush Goyal said at another event on March 11 on the deadline for the proposed India-U.S. BTA, that India will “never negotiate on gunpoint…Deadlines are good for expediting the talks. But unless we are able to safeguard our core interests and the interests of our people, we will not negotiate in a haste.”
Such mixed signals from India’s key ministers are gratuitous under current circumstances. In 2024, the US had a $46 billion trade deficit with India – largely in services of which Indian exports to the U.S. are $40.26 billion – of a total bilateral trade of $129.2 billion. India’s total merchandise exports in FY 2023-24 were $437 billion, and the U.S. as India’s largest export destination, accounts for about 18% of this.
Should a trade deal not go through, in 2025, India could see a deceleration in its goods exports to the US to hit $5.76 billion, with the plummeting of shipments of key products such as iron and steel, fish, diamonds, gold and electronic products, among others, according to a research conducted by the Global Trade Research Initiative (GTRI).[3]
When Vance arrives in India, therefore, India should put its best foot forward, reminding the U.S. trade representatives that unlike China, it has not artificially inflated manufacturing capabilities to create significant surplus returns. Although India has already approached the World Trade Organisation (WTO) for consultations over the U.S.’ imposition of 25% import duties on steel and aluminium products, it will be wise not to initiate a dispute at the WTO whilst negotiating a BTA.[4]
Delhi needs to also keep in mind that the West, which sees India as a credible counterweight to China, is asking it to reform and come out of its lackadaisical approach to trade and foreign direct investment. Therefore, negotiating and finally concluding a BTA with the US will compel India to bring in the much-needed industrial and agricultural reform. As economist Surjit Bhalla puts it, this is India’s “second 1991 moment.”[5](5)
In its official communication, the White House has said Vance’s top agenda will be to “hold meetings” with Modi. Clearly, the BTA and tariffs will be prioritized. India has much to gain by playing the trade game like an adult – navigating the tariff and non-tariff barriers, whilst learning the ropes on how to enter the new era of trade with a friendly but aggressive power.
Nayanima Basu is a journalist who writes on issues of foreign policy and is the author of “The Fall of Kabul: Despatches from Chaos”.
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References:
[1] Kripalani, Manjeet, and Wadhawa, Anil. “India-Australia Economic Cooperation and Trade Agreement.” Gateway House, January 30, 2025. https://www.gatewayhouse.in/india-australia-economic-cooperation-and-trade-agreement-a-case-study-in-overcoming-reticence-and-establishing-trust/.
[2] “Keynote and Inaugural Conversation | S. Jaishankar at Global Technology Summit 2025.” Carnegie India, April 11, 2025. https://www.youtube.com/watch?v=iiDCoVE5VeM.
[3] “Impact of New Trump Tariffs on India’s Merchandise Exports to USA.” Global Trade Research initiative (GTRI), April 7, 2025. https://gtri.co.in/gtriFlagshipReportsd.asp?ID=99.
[4] “USTR Releases 2025 National Trade Estimate Report.” United States Trade Representative, March 31, 2025. https://ustr.gov/about/policy-offices/press-office/press-releases/2025/march/ustr-releases-2025-national-trade-estimate-report. The US has reiterated its demand that India joins the “multilateral efforts to address the problem of global non-market excess capacity in the steel and aluminium sectors” such as the Global Forum on Steel Excess Capacity (GFSEC) and the proposed Global Arrangement on Sustainable Steel and Aluminium (GSA) and others initiatives under the OECD. India was a member of the GFSEC but has since exited the forum in 2020, following China and Saudi Arabia’s withdrawal from the forum. The GFSEC, created in 2016, aimed to address global excess capacity and enhance market function in the steel sector, comprising over 30 countries representing approximately 90% of global steel output.
[5] Bhalla, Surjit S. “India’s Second 1991 Moment.” The Indian Express, April 12, 2025. https://indianexpress.com/article/opinion/columns/indias-second-1991-moment-9939458/.