New Delhi, India – The optics have been heat: As United States Vice President JD Vance and his household visited Narendra Modi on Monday night, the Indian prime minister confirmed them round his residence and gave every of the American chief’s three youngsters a peacock feather.
However behind the grins and hugs hovered the shadow of US President Donald Trump’s risk to impose main tariffs on Indian items as part of the commerce battle he has unleashed on the world since returning to workplace in January.
Vance’s four-day tour, which started on Monday, comes because the Modi authorities desperately tries to duck US tariffs. These “reciprocal” tariffs – together with a 26 % levy on Indian exports to the US – are at present on pause for 90 days, till July 8, for all nations besides China. India, like all different nations, nevertheless, is at present being tariffed at 10 %.
The US is India’s largest buying and selling associate and the largest purchaser of its exports. Officers from the 2 nations have been engaged in intense negotiations to lock down a bilateral commerce settlement that might enable them to keep away from a tariff battle.
However these negotiations have prompted considerations amongst Indian farmers: The nation has lengthy used tariffs to defend agriculture from being swamped by merchandise from different nations. Now, farmers important of Modi concern that the Indian authorities could weaken these protections as a part of a commerce cope with Trump.
As Vance ready to trip along with his household at India’s famed Taj Mahal and historic forts, dozens of farmers protesting in a number of villages throughout India burned his effigies on Monday and raised slogans: “Return, Vance. India just isn’t on the market!”
So, what’s at stake on Vance’s maiden go to to India? How a lot do India and the US want one another economically? How a lot do they tariff one another? And what are the political challenges Modi faces in negotiating a commerce deal?
What did Modi and Vance discuss?
On Monday night, Modi obtained Vance alongside along with his spouse, Usha Vance, whose dad and mom are from India, and their three youngsters at his residence, the place the leaders additionally individually held talks. They “reviewed and positively assessed the progress in varied areas of bilateral cooperation,” Modi’s workplace mentioned in an announcement late at evening.
The leaders “welcomed the numerous progress within the negotiations for a mutually helpful” bilateral commerce settlement, the assertion added, noting “continued efforts in direction of enhancing cooperation in vitality, defence, strategic applied sciences and different areas”.
Nonetheless, the statements didn’t delve into the small print of the continued closed-door commerce negotiations.
Vance’s workplace mentioned in an announcement {that a} bilateral commerce settlement presents a possibility to barter a brand new and fashionable one targeted on selling job creation and citizen wellbeing in each nations.
The US vp’s go to builds on early engagement between the 2 governments in Trump’s second time period. Modi was among the many earliest leaders to fulfill Trump in Washington, DC in February, and Trump is predicted to go to India later this 12 months for a summit of the Quad grouping, which consists of the US, India, Japan and Australia, and is broadly seen as a counter to China’s affect within the Asia Pacific area.
Randhir Jaiswal, India’s Ministry of Exterior Affairs spokesperson, mentioned Monday that Vance’s go to would “additional deepen the India-US complete world strategic partnership”.
What’s Vance’s go to actually about?
Whereas India views the US as a important strategic associate as New Delhi more and more battles Beijing’s clout within the Indian Ocean area, Washington, too, sees the world’s largest democracy as a counterbalance to China.
However Trump’s tariff threats have perturbed that broader convergence of pursuits.
Throughout Vance’s go to, India’s efforts will probably be targeted on expediting commerce negotiations with the US, mentioned Anil Trigunayat, a former Indian diplomat who has served within the US, “so that there’s minimal injury to ongoing commerce, because the US is India’s largest buying and selling associate”.
But some critics fear that the Modi authorities’s wager on the PM’s bonhomie with Trump – they’ve each described one another as mates – to resolve tariff tensions may be misplaced. In contrast to China, the European Union or Canada, India has prevented responding to Trump’s threats with its personal countermeasures.
“The Indian aspect has not proven any energy or resilience. The entire public indications have proven that they’ve been extraordinarily pliable and attempting to please the US authorities,” mentioned Jayati Ghosh, economics professor on the College of Massachusetts Amherst.
“The US is actually utilizing bullying ways to try to extract as many concessions as attainable,” Ghosh informed Al Jazeera. “It is extremely unhealthy for India’s safety and economic system – and it’s unacceptable.”
How a lot do India and the US commerce with one another?
For a number of years, the US and China have competed for the tag of India’s largest buying and selling associate.
In 2024, the US pipped China to the highest slot: India-US bilateral commerce was value $129.2bn, per US authorities commerce information. India-China commerce was value $127.7bn.
However commerce with China primarily contains of India importing from its bigger neighbour – India imported greater than $110bn value from China and exported lower than $15bn in 2024.
In contrast, India’s stability of commerce may be very beneficial with the US, and the nations are eyeing an bold goal of increasing their bilateral commerce to $500bn by 2030.
Final 12 months, US exports to India amounted to $41.8bn. Whereas oils and fuels preserve an almost 30 % share with virtually $13bn, they’re adopted by valuable pearls and stones, amounting to $5.16bn. India additionally imports components of nuclear reactors, electrical equipment and tools, and medical devices from the US.
The US, in the meantime, is India’s largest export market. Indian exports to the US totalled $87.4bn in 2024. Pearls, electrical equipment, and pharmaceutical merchandise lead India’s export merchandise.
India additionally exports natural chemical substances, textile articles, metal and attire to the US.
The US commerce deficit with India stands at $45.7bn in 2024, in New Delhi’s favour. That’s small in contrast with the US commerce deficit with China – $295bn final 12 months. Nonetheless, India ranks tenth amongst nations that the US has the biggest commerce deficits with.
What has Trump accused India of?
As Trump has engaged in an all-out commerce battle with China, the US president has additionally railed repeatedly towards India, describing it as a “tariff abuser” and “tariff king”. Trump insists that many nations – together with China and India – have cheated the US, gaming globalisation to promote the US rather more than they purchase from it and utilizing tariffs to realize this aim.
In a joint information convention throughout Modi’s Washington go to in February, Trump famous that India has “been very robust on tariffs”. “It’s very laborious to promote into India as a result of they’ve commerce boundaries, very robust tariffs,” he mentioned.
He repeated that allegation in public, at the least thrice, in March. “India expenses us large tariffs, large, you’ll be able to’t even promote something into India. It’s virtually, it’s virtually restrictive. It’s restrictive. We do little or no enterprise inside,” Trump mentioned.
He did, nevertheless, concede that the Indian authorities was accommodating a few of his considerations.
“They’ve agreed, by the way in which, they need to reduce their tariffs approach down now as a result of any individual’s lastly exposing them for what they’ve executed,” Trump mentioned.
How excessive are India’s tariffs on US items?
Certainly, as Trump mentioned, India has already supplied some concessions to the US in latest weeks, slashing tariffs on luxurious items like bourbon – down from 150 to one hundred pc – and high-end bike manufacturers like Harley Davidson – from 50 to 40 %.
However even with these cuts, present tariff charges stay very excessive – and far larger than the tariffs that Indian items face within the US.
Whereas bourbon has obtained some reduction, all different imported alcohol continues to be tariffed at 150 %. The responsibility on premium vehicles and bikes can go as much as 125 %, and agricultural merchandise like walnuts face a one hundred pc tariff.
India’s common tariff charge is 17 %, in contrast with 3.3 % by the US, as per a report by the Indian Council for Analysis on Worldwide Financial Relations (ICRIER).
“Probably the most hanging distinction is within the agriculture sector, the place India’s tariffs are notably larger,” ICRIER mentioned within the February report.
The straightforward common tariff charge that India imposes on agricultural imports is 39 %, in keeping with ICRIER – pointing to the nation’s protectionist insurance policies. In contrast, the Indian suppose tank discovered, “the US maintains comparatively low agricultural tariffs.” The straightforward common tariff charge that the US expenses on agricultural imports is 4 %.
The gulf is broad in different sectors, too.
US pharmaceutical exports to India face a ten.9 % tariff. In contrast, Indian pharma merchandise face a tiny 0.01 % tariff whereas getting into the US.
US electronics exports to India are taxed at 7.64 %, whereas Indian electronics exports to the US face a mere 0.41 % tariff.
How are India-US tariff negotiations shaping up?
Thus far, the early tariff cuts on bourbon and high-end motorbikes have helped India sign to the US that it’s open to negotiations on lifting levies additional.
Now, talks are on, and on Monday, Indian Finance Minister Nirmala Sitharaman mentioned a primary part of a commerce cope with the US may very well be prepared by the top of the 12 months.
However it’s unclear if that timeline will work for Trump, whose 90-day respite ends in July. Trump’s coercive strategy, mentioned commerce economist Biswajit Dhar, just isn’t conducive to diplomacy.
“Trump doesn’t need guidelines in commerce,” mentioned Dhar, describing the US president’s strategy as “legal guidelines of the jungle”.
“India has to make sure that it’s a win-win scenario. We can’t have Trump have his say,” he mentioned.
Trigunayat, the retired diplomat who has participated in a number of multi-national commerce treaties, mentioned it was necessary for the Modi authorities to be clear, throughout negotiations, about its political limitations.
“It is extremely necessary to place your playing cards on the desk and clarify your home scenario,” he mentioned. “On a world stage, we begin with a maximalist place. After which they arrive someplace in between.”
“However we all the time should safeguard our residents’ wants.”
And nowhere is that conundrum sharper than in agriculture.
Can India slash agriculture tariffs?
Within the final 5 a long time, India has transitioned from a food-deficit nation to a food-surplus one and has turn into a number one exporter of agricultural merchandise. As an example, India accounts for 40 % of world rice exports.
However India has saved tariffs excessive to safeguard its farmers from imports that may in any other case flood home markets – practically half of India’s inhabitants depends on farming or the agricultural sector.
India additionally exports shrimp, vegetable extracts, castor oil, and black pepper; in flip, the US sends walnuts, apples, almonds, and pistachios.
Now, the US needs to stability that equation and has pressured India to scale back tariffs in order that its farm merchandise can enter the world’s most populous nation extra simply.
That prospect has many Indian farmers on edge.
“We’re fully saved in the dead of night about these commerce negotiations – there isn’t a transparency; and in a federal setup like India, how can the federal government operate like this?” mentioned Vijoo Krishnan, common secretary of the All India Kisan Sabha (AIKS), India’s oldest farmers’ union that’s main the protests towards Vance’s go to. The AIKS is the farmers’ wing of the Communist Social gathering of India, which is a part of the nationwide opposition.
“The Modi authorities has been sliding in a route of free commerce and slashing import duties – and if it consists of the farming sector, then we’re doomed,” he mentioned, arguing that an Indian farmer wouldn’t be capable of compete with Western counterparts, who’re “a lot richer”.
Indian farmers have already as soon as proven their political may to Modi: Large protests compelled the prime minister to withdraw three controversial farm legal guidelines in 2021.
“The protests and rolling again the legal guidelines have been a humiliating defeat for the Modi authorities – they’re taking revenge on the farmers by pushing them below the bus now [through a trade deal with Trump],” claimed Krishnan.
Any tariff waivers on agricultural imports would must be weighed towards the dangers they may pose to the livelihood of tens of millions of Indian farmers, cautioned Dhar, the commerce economist.
“If we bow to the US calls for in negotiations, it’ll create a complete lot of financial, social and political issues for the federal government,” Dhar mentioned. “They can’t actually afford to danger the lives of tens of millions of Indians.”
