India and the United States of America will almost certainly reach a trade deal, perhaps soon. Logic and rationality virtually dictate this. And while trade tension between India and its largest export market and most natural business partner is not something that India wanted, it may be just the thing India needs. What might this deal look like? To see whether India ‘wins’ or ‘loses’ in these negotiations, you should ignore specific items — more alfalfa from the US? Easier certification procedures for electronics? — and focus on the bigger picture.
India needs a big, positive trade reset for its own sake, and it can use the current situation as a catalyst for its own ends. A successful trade deal, from India’s perspective, will hinge on whether negotiators grasp the possibilities of the moment or they focus on small matters of interest to limited constituencies. In US parlance, India should go big or go home.
The tariff disputes and unusually direct diplomatic language naturally feel unjust and unwarranted but present India with a unique opportunity to transform what appears to be a challenge into a strategic advantage. India’s dignified restraint allows it to use this moment as a catalyst for long-overdue economic reforms that will benefit Indian businesses, strengthen regional partnerships, and position the country as a more effective counterweight to Chinese influence — all the while maintaining appropriate relations with Russia and China. The alternative is stagnation and a perpetually inferior role with unappealing partners.
The public posturing over dairy imports illustrates India’s fundamental challenge; if swadeshi is good for India, why is swadeshi not good for the US? Consider this: at this very moment, somewhere in the American Midwest, trucks carrying Amul milk products, including Amul Taaza, Amul Gold, and Amul Slim n Trim — produced by American cows from Amul’s US operations — are headed for Indian-American grocery chains such as Patel Brothers or warehouse giants like Costco.
Yet, if Amul tried to export that same American-produced Amul milk to India, current Indian regulations would block it by citing a rotating series of objections, from safety concerns to religious practices to the need to protect small farmers. The irony is palpable: India protects its small dairy farmers from imports produced by Amul America, which is owned by Amul India, which is itself a collective of small Indian dairy farmers.
This is simply one instance where India argues that its people deserve protection, but tariffs to protect Americans are somehow unfair. It’s simply not a credible position, and the fury of the Donald Trump team at this is palpable and rational. India loses little and
gains much credibility by abandoning such positions.
The 2024 National Trade Estimate Report from the US Trade Representative offers a comprehensive menu of Indian trade barriers that could be addressed without compromising genuine sovereignty. Does India’s national dignity truly depend on unnecessary restrictions on Distiller’s Dried Grains with Solubles? Must domestic re-testing and certification requirements apply to equipment already approved in the world’s most regulated markets? Do Indian inspectors really need to visit every foreign chemical plant?
These are not matters of sovereignty but remnants of an outdated regulatory philosophy that strangles both Indian and foreign businesses. By framing the removal of such restrictions as ‘concessions’ in trade negotiations, India can achieve what it should have done decades ago: complete the promise of economic liberalisation. The beauty of this approach lies in its political palatability — reforms that might face domestic resistance as ‘pro-foreign’ policies become acceptable when presented as negotiating victories.
The current trade tensions highlight the potential of India’s regional relationships. The United Arab Emirates, Bangladesh, and Sri Lanka have all fared better than India in early tariff assessments, receiving 10%, 20%, and 20% rates, respectively. Rather than viewing this as a setback, India should see it as an opportunity to deepen economic integration with these neighbours.
The UAE relationship deserves particular attention. Indian companies increasingly view the UAE as an attractive base for operations, offering superior infrastructure, greater access to international talent, and a more business-friendly environment. Strategically, the UAE provides a natural bridge to African markets where Indian companies can expand their presence while indirectly supporting American efforts to counter Chinese influence.
This approach offers elegant strategic benefits: India expands its economic sphere of influence, supports regional partners, and helps contain Chinese expansion without directly confronting Beijing or appearing to abandon traditional partnerships with Russia and China.
To India’s credit, the government has shown remarkable restraint in responding to unusually direct language from American negotiators. India’s measured response demonstrates the country’s evolution into a confident middle power capable of engaging with difficult partners without losing its composure.
India’s strength lies in its ability to maintain relationships across the geopolitical spectrum while advancing its own interests. China and Russia, despite their rhetorical support, offer limited economic alternatives to American markets. China’s massive trade deficit with India and reluctance to provide meaningful market access, combined with Russia’s economy being smaller than that of California or of Texas, make it clear that these relationships, while important, cannot substitute for American economic partnership.
Some course correction is obviously needed in these circumstances. India’s attempt to rely on its perceived special relationship with the US fundamentally misunderstood the nature of the current American administration. The additional 25% tariff imposed due to Russian oil purchases, while politically motivated, illustrates just how badly India misjudged animosity toward restrictions on market access.
The current trade friction represents a moment of unusual clarity in international relations — a chance for India to abandon defensive postures and embrace the confident pragmatism that has served East Asian economies so well. Just as Japan and China found ways to say ‘no’ to American demands while saying ‘yes’ to American markets and domestic investment, India can maintain its dignity while accelerating its development.
The question is not whether India is confident enough to say ‘yes’ to opportunity, but whether it is wise enough to recognise that this moment of apparent crisis actually represents the chance to achieve what decades of internal political dynamics have prevented: the completion of India’s economic transformation into a truly liberalised, globally integrated economy that serves as a bridge between East and West, developed and developing worlds.
In this light, even forbidden Amul Taaza from America will taste like victory.
Russell Stamets is a partner with the New Delhi-based law firm, Circle of Counsels, and advises Indian and foreign companies and investors on business matters, regulatory issues, and complex disputes
