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Transactional dimension will define India-US ties

Mar 23, 2025 08:10 PM IST

Following recent interactions with American officials and experts alike, it is clear the India relationship is critical to the White House

Lutnick and Navarro are not India people; they see trade and business through the prism of a broad-based economic value proposition to Make America Great Again (MAGA). This is the sentiment across Washington DC. Howard Lutnick is the US secretary of commerce. Peter Navarro is President Donald Trump’s senior counsellor for trade and manufacturing. The point being made was that unlike in the Joe Biden era, the size and quality of the India file in the White House is unlikely to be determined by an overarching grand strategic commitment to India.

The Trump White House will continue to support India’s development of a semiconductor ecosystem providing the US with a trusted supply chain (Getty Images via AFP) PREMIUM
The Trump White House will continue to support India’s development of a semiconductor ecosystem providing the US with a trusted supply chain (Getty Images via AFP)

It will be informed, at least as interlocutors put it, by the extent to which both countries manage a trade deal. Further, what is clear is that Trump would like to see speedy progress on changes made to India’s Civil Liability for Nuclear Damage (CNLD) Act, paving the way for American firms to sell small modular reactors (SMR) and other civil nuclear equipment to India. The extant of liabilities in the existing Act, global firms claim, have made it difficult if not impossible to realise the potential of the so-called US-India nuclear deal inked in October 2008.

The equation, as far as Washington insiders are concerned, goes something like this. Address the two sets of frictions highlighted above and this will, in turn, unblock deeper and wide-ranging cooperation in cross-cutting sectors such as technology, defence, energy, and through plurilateral arrangements. These insiders claim that in these segments, the Trump administration is willing to “go further” than any before it.

No doubt, as the US-India joint statement following Prime Minister Narendra Modi’s official working visit to Washington DC last month suggests, the considered ambition to do more with India is clear. The initiative for Critical and Emerging Technology (iCET) that provided some key wins for India on semiconductors, space and in defence has morphed into a broader agenda under a new construct: Transforming the Relationship Utilising Strategic Technology (TRUST).

There is a verve to work on quantum, that was unrealised in the last few years. There is an interest in strengthening the US-India bio-pharma innovation ecosystem and de-risk the reliance on top active pharmaceutical ingredients from China. Whilst the Trump White House has expressly made a case for on-shoring semiconductor manufacturing, it is also apparent, as of now, that they will continue to support India’s development of a semiconductor ecosystem providing the US with a trusted supply chain.

On defence, a 10-year defence agreement, first signed in 2005, will be re-negotiated this year. From doing more with special forces to realising the potential of the Autonomous Systems Industry Alliance — a new initiative to co-produce autonomous technologies — there is a clear strategic motivation to do more with India.

Yet, the current levels of ambiguity lie in the extent to which the two sets of frictions, highlighted above, serve as a litmus test for other and wider aspects of the relationship. Currently, there seems to be a sense that there is something of a sequential logic to building this strategic partnership. Fix trade and nuclear liability, and the rest will follow, is the vibe in the DC circuit, inside and outside of government. To be sure, there are many in Washington DC, cloaked in blue, red and something in between that support what they see as a hardening stance on India. “You had it too easy under Biden,” is how a friend of India’s put it to me. That this was not the case, and that the age-old argument on and around American “altruism” towards India is empirically misplaced, no longer matters to those in the seats of power and to those out of power. This is the reality that India has to contend with.

There are no easy choices. On the one hand, negotiators could practise the mastered technique of delaying economic imperatives with the view to do little now and promise much down the line. It is unlikely that this approach will work. Negotiators will be the best judge of the extent to which US administration officials are posturing with maximalist demands from the outset. Is it really the case that by unlocking well-stated frictions the “rest” will just follow? These are the questions that must clearly burn Indian officials and insiders alike.

However, and increasingly, following recent interactions with American officials and experts alike, it is clear the India relationship is critical to the White House. There is an undisguised ambition to work with India more closely on a range of areas from Artificial Intelligence to the co-production of defence assets. The litmus tests highlighted above are not theoretical constructs. They are real.

As the joint statement puts it, a “results driven agenda with initial outcomes this year” is central to demonstrate the level of trust for a mutually beneficial partnerships. This should be taken at face value. Whether or not the trade-offs are worth it is, of course, a call that the Indian political establishment will need to determine.

Rudra Chaudhuri is director, Carnegie India. The views expressed are personal

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