A landmark in bilateral ties

Notwithstanding a negative assessment by the anti-Modi and anti-Trump brigade, PM Modi’s meeting with Trump was crucial for bilateral ties with a comprehensive agenda covering trade, defence, energy, nuclear technology, space, market access etc. to further strengthen the Global Comprehensive Strategic Partnership. Bonhomie and pragmatism led to the substantive outcome. The Joint Statement and pressers indicated the desire of the two leaders to strengthen.

Modi succinctly summed up India’s agenda before visiting Washington: “It is an opportunity to build upon successes of our collaboration in Trump’s first term and develop an agenda to further elevate and deepen our partnership, especially in technology and, trade, defence, energy, and supply chain resilience.”

Several significant initiatives were taken. First, they launched the “US-India COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology) for the 21st Century” aimed at pushing transformative change across key pillars of cooperation with a results-driven agenda.

This established a mechanism to monitor progress. Second, the leaders agreed to sign this year a new ten-year Framework for the US-India Major Defense Partnership in the 21st Century to advance defence ties and expand defense sales and co-production with India to strengthen interoperability and defense industrial cooperation. Third, they agreed to reopen negotiations for a Reciprocal Defense Procurement (RDP) agreement to better align their procurement systems and enable the reciprocal supply of defense goods and services.

Fourth, they announced a new initiative – the Autonomous Systems Industry Alliance (ASIA) to push up industrial partnerships and production in the Indo-Pacific. Fifth, notwithstanding some differences on tariffs, the leaders set a bold new goal for bilateral trade – “Mission 500”- to double total bilateral trade to $500 billion by 2030. Trump appreciated India’s recent measures to lower tariffs on US products of interest in the areas of bourbon, motorcycles, ICT products and metals, as well as measures to enhance market access for US agricultural products, duck meat, and medical devices. Significantly, the two leaders committed to enhancing bilateral trade by increasing US exports of industrial goods to India and Indian exports of labour-intensive manufactured products to the US.

Sixth, they agreed to establish the US as a leading supplier of crude oil and petroleum products and liquified natural gas to India. This is intended to meet the increasing requirements of India and Trump’s desire to export hydrocarbons to India to balance trade. Seventh, they committed to fully realise the US-India 123 Civil Nuclear Agreement by moving forward with plans to work together to build US-designed small modular nuclear reactors in India through large-scale localization and technology transfer. India is taking steps to amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act (CLNDA) for nuclear reactors to meet the requirements of the US.

Eighth, they announced “the launch of the US-India TRUST (“Transforming the Relationship Utilizing Strategic Technology”) initiative, which will catalyse government-to-government, academia and private sector collaboration to promote the application of critical and emerging technologies in areas like defense, artificial intelligence, semiconductors, quantum, biotechnology, energy and space, while encouraging the use of verified technology vendors and ensuring sensitive technologies are protected.” It is aimed at putting forward a US-India Roadmap on Accelerating AI Infrastructure by the end of the year in collaboration with the private sectors of the two countries. They agreed to build trusted and resilient supply chains, including for semiconductors, critical minerals, advanced materials, and pharmaceuticals as part of the TRUST initiative.

Ninth, the Indo-Pacific and the Middle-East issues also remained in focus. They stressed that a free, open, peaceful, and prosperous Indo-Pacific region was central to the economic prosperity of the region and underpinned the ASEAN centrality, adherence to international law and good governance. This was a message to China. They also agreed to push the India-Middle East Economic Corridor and a meeting on this is expected within six months.

Tenth, they committed to strengthen cooperation against terrorist threats from groups, including Al-Qaeda, ISIS, Jaish-e Mohammad, and Lashkar-e-Tayyiba to prevent heinous acts like the attacks in Mumbai on 26/11 and the Abbey Gate bombing in Afghanistan on August 26, 2021. Crucially, they called on Pakistan to expeditiously bring to justice the perpetrators of the 26/11 Mumbai, and Pathankot attacks and ensure that its territory is not used to carry out cross-border terrorist attacks. This was a strong message to Pakistan to stop supporting terrorist outfits on its soil.

The tariff issue is yet to be settled. Both sides understand each other’s interests. In 2023-24, the US was the largest trading partner of India with $119.71 billion bilateral trade in goods ($77.51 billion worth of exports, $42.19 billion of imports and $35.31 billion trade surplus). Trump desires reciprocal tariffs to balance trade and pay off the US debts which have increased. India has to protect its industries, which demand support. But the issue is not insurmountable. The Global Trade Research Initiative has pointed out that for 75% value of the US exports to India, the average tariff is less than 5%. These include electronic items, Of course, India faces high US tariffs on many labour-intensive goods like textiles, garments, and footwear, ranging between 15-35% on several products.

The US and India have convergence on several international issues like the ending the Ukraine war, containing China’s aggressiveness, stopping Pak support to terrorism, Indo-Pacific, and connectivity project. Besides, the US has agreed to sell their best platforms including the F-35 and help India get the advanced technology to boost production. While Trump stated earlier that India would have the best friend in the White House once he moved there, the punch line on the significance of the meeting was given by Modi: ‘The Make America Great Again (MAGA) and Make India Great Again (MIGA) i.e.

Viksit Bharat would result in mega collaboration.’ It is heartening to note that the two sides have already started to have discussions at various levels including think tanks and private sector for research, cooperation, and commercial relationships across defence, technology, energy, and critical minerals sectors.

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