Trump’s whims and Washington’s warnings. India is the fall guy

Despite renewing a defence pact, strategic cooperation between India and the US appears increasingly fragile

The long-awaited trade deal between India and the United States has yet to see the light of day. The delay is emblematic of the current state of ties between the two countries.

The bonhomie that characterised Prime Minister Narendra Modi’s visit to Washington in February has long since evaporated, while the hectoring tone of top US officials has been increasing by the day. The last few days may have seen a mellowed Donald Trump, who is once again talking about Modi being his friend, but there is little to indicate that tensions have decreased between the two countries.

Apart from the trade issue, the high cost being imposed for granting H1B visas has had a dampening effect on US tech companies that rely on talent coming from India. The visas will now cost $100,000 as a one-time levy. It is well known that the bulk, over 70 per cent, of the visas are for Indians, so it looks as if the measure was carefully targeted. At the same time, the companies affected are largely American. This includes Amazon, which tops the list of visa sponsors with ~10,000 in 2025. This is followed by TCS with 5,500, while other Indian firms like Infosys do not even figure in the top 10.

The impact of the decision will be to curb the flow of India’s best and brightest scientific and engineering talent to Silicon Valley, an arena where the environment is conducive to innovation. The rationale for the high cost is apparently to promote hiring of more Americans, but this is not likely to be the outcome. The reason is that the US simply does not have enough graduates in the STEM (science, technology, engineering, mathematics) stream.

The move came on the back of repeated demands by Trump that India should stop buying Russian oil. The argument that these purchases are providing resources for Russia’s war against Ukraine is specious, given that there has been no criticism of the biggest buyer, China. In fact, Russian oil was not mentioned at all in the Donald Trump-Xi Jinping summit in South Korea.

The double standards on this score have been highlighted by the latest exemption given to Hungary, allowing it to buy Russian oil. The only conclusion is that India is being made the fall guy, while China and Hungary are being given a free pass.

This brings us to the contentious trade issue. The wrecking ball that has shattered ties between India and the US seems to be working hardest here. After the Trump-Xi summit, tariffs on China’s goods have been brought to 47 per cent. Pakistan is already at 19 per cent. Other countries in the region, like Vietnam are at 20 per cent, with Malaysia and Indonesia at 19 per cent. This leaves India with a whopping 50 per cent tariff, of which 25 per cent is a punitive levy for importing Russian oil.

The impact of the 50 per cent tariffs is already being felt in terms of reduced exports to the US. Latest reports say air cargo shipments have fallen to a nine-year low, as tariffs have made goods unaffordable for buyers. Jobs are also expected to be hit in labour-intensive industries like textiles, gems and jewellery, and handicrafts.

In the backdrop of these worsening ties, New Delhi and Washington renewed a 10-year defence framework pact. But the much-vaunted Quad grouping, along with Australia and Japan, seems to be on shaky ground, with the summit planned to be held in India having been postponed.

India-US ties are, thus, stretched to the breaking point. The reasons for the creation of fissures between two countries that seemed headed to be long-term strategic partners are, on the surface, unfathomable. The fissures seem to have been created by whimsical decisions taken by Trump. Many causes have been identified for the hostility shown to India by him and his team. These include the interest in cryptocurrency deals linked to Pakistan and ire over New Delhi’s refusal to give him credit for resolving the conflict between the two neighbours.

Whatever these reasons may be, they are clearly not predicated on any long-term strategy that takes the interests of both countries into account. Trump has. Therefore, demolished a relationship that was blossoming into one that would provide support to both on the geopolitical front.

As for India, it has rightly taken the approach that the declining relationship with the US needs to be shored up by deepening ties with other economic and strategic players. It has, thus, moved to enter FTAs with a host of countries while looking forward to deepening ties yet again with Russia. These pragmatic policies should yield results for an economy that is largely domestic-oriented. Yet it remains regrettable that ties with the US have now fractured, likely beyond repair.

Sushma Ramachandran is a senior journalist.

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH)