India–US Trade Deal Stalled Amid Political and Strategic Tensions

The proposed India–US trade deal has hit a roadblock, with US Commerce Secretary Howard Lutnick claiming that the agreement collapsed because Prime Minister Narendra Modi did not personally call President Donald Trump. According to Lutnick, the deal was “all set up” but required Modi’s direct outreach to Trump, which New Delhi was reportedly uncomfortable with. As a result, Washington moved ahead with trade agreements with Indonesia, the Philippines, and Vietnam, leaving India behind.

Lutnick’s remarks highlight the transactional nature of Trump’s approach to diplomacy, where personal gestures are often equated with political commitment. He further stated that the conditions under which the deal was initially negotiated are no longer available, describing India as having “missed the train.” This setback comes at a time when bilateral trade negotiations had already undergone six rounds, with Indian exporters eagerly awaiting relief from steep tariffs that have eroded competitiveness in the US market.

Complicating matters further is Trump’s approval of the bipartisan Russia Sanctions Bill, which authorizes punitive tariffs of up to 500% on goods from countries that continue purchasing Russian oil. India, despite reducing imports from sanctioned Russian entities, remains under pressure as Washington seeks to leverage trade policy to influence New Delhi’s energy choices. Trump has openly warned that tariffs on India could rise “very quickly” if cooperation falters.

Despite these tensions, India’s exports to the US rose 22.61% in November, underscoring the resilience of trade ties. The US remains India’s largest trading partner, accounting for nearly 18% of exports. Yet, disagreements over agricultural concessions and energy policy reveal the limits of alignment. For India, the challenge lies in balancing strategic autonomy with the need to safeguard access to the American market, while for Washington, the stalled deal reflects the complexities of mixing diplomacy with personal politics.