By all accounts, India and the United States of America are close to locking down a comprehensive trade agreement that could end the bitter tariff war unleashed by President Donald Trump on Indian products. The Union commerce minister, Piyush Goyal, has indicated that there is “good news” on the horizon, perhaps as soon as November end or before the end of the year.
For a country that has been slammed with 50% tariffs by its biggest export destination, the end of those punitive levies would be welcome. Labour intensive sectors, such as diamond-cutting in Surat, have seen thousands of layoffs as the tariffs stalled fresh orders from the US.
But Goyal has also made it clear that any trade deal with the US would need to be “fair, equitable and balanced”. That’s a high bar to meet when negotiating with Trump who revels in signing deals that are demonstratively loaded in favour of the US. Different sectors of the Indian economy, independent experts, and the rest of the world will be watching carefully to see what is in the deal as well as the unsaid compromises that might not be mentioned in the text but that would catalyse such a pact. Prime Minister Narendra Modi and his government know that conceding too much by way of lowered
tariffs in agriculture or fisheries could lead to a domestic political backlash that may spiral out of control.
So what can India give the US instead? Some signs are already visible. Last week, Reliance, which owns the world’s largest petroleum refinery, announced that it was stopping the import of Russian oil, as Trump has demanded of India. Indeed, India’s purchase of Russian crude was the trigger for Trump to double tariffs on Indian goods from 25% to 50%. It is inconceivable that Reliance took this step without a nod, at the very least, from the Indian government.
On November 17, India’s petroleum and natural gas minister, Hardeep Singh Puri, announced that India would source about 2.2 million tonnes of liquefied petroleum gas from the US every year starting 2026. At a time when Trump is trying to increase US oil and gas production, an India that is willing to buy LPG from the US is good news for his administration.
COP30, the United Nations climate change summit, just got over and India, as always, portrayed itself as a nation on the move towards clean energy. But if buying American fossil fuels can shield the country from Trump’s wrath, New Delhi appears to have concluded that the carbon emissions are worth it.
Also last week, the US announced sales of $93 million worth of arms to India. Trump has complained in the past that India doesn’t buy enough weapons systems from the US, and if New Delhi can show that it views American arms manufacturers as partners, that should pacify the US president.
But there’s a risk in all of this. Ultimately, Trump’s track record suggests he does not seek win-win deals. Instead, he wants the other party to submit before him and accept agreements that underscore the position of the US as the world’s pre-eminent economy.
Will he seek a commitment of untold billions in investments from India in the US? Will he demand tax breaks for American companies in India? Will he insist on India aligning itself more closely with his foreign-policy moves?
Equally critically, how will India respond? To deal with Trump, India will need red lines not just in terms of specific sectors that it won’t want affected adversely by a trade deal but in terms of concessions outside direct commerce that he might demand of New Delhi.
It is the deal behind the official deal that India needs to be wary of. If that’s unbalanced, no agreement will be sustainable.
Charu Sudan Kasturi is a journalist who specialises in foreign policy and international relations