Illegal immigration, tariffs and the US-India Defence Act will be top on the agenda.
Indian Prime Minister Narendra Modi will be visiting the United States from 12 to 13 February at the invitation of US President Donald Trump. The visit is very important in as much as it has to address certain key issues that will define India’s place in the world in the Trump era, which is marked by unpredictability, brash decisions, and an unabashed and unrestrained pursuit of US interests as defined by him.
In his first term as President, Trump was not as transactional and aggressive as he is now, in his second term. Today, words of high praise could well be a prelude to a hard knock. The Indian Prime Minister has to pursue his national interest in an unfamiliar context. It calls for both firmness and flexibility.
Illegal Immigrants
India has three main concerns now vis-à-vis the US: illegal immigrants, threatened tariffs, and the US-India Defence Act.
The most immediate, from the Indian domestic point of view, is the high-handed and almost inhuman way in which illegal Indian immigrants have been deported, chained, shackled, and bundled into a US military aircraft. They had indulged in an illegality by entering the US clandestinely but are not hardened criminals to be chained throughout a 40-hour journey to India.
New Delhi played down the episode at first but soon agreed to take up the matter with the Trump administration. If Trump were to order a stop to such treatment and assure that the 478 remaining illegal immigrants (or 170,000 according to US estimates) will be treated with some dignity, it would go a long way towards creating a favourable climate for growing US-India relations. Persistence with harshness on the part of the US will be fodder for the forces of ultra-Indian nationalism that will harm US interests too.
Hike in Tariffs
The second key issue Modi will have to raise with Trump is his threat to impose punitive tariffs on Indian products. India’s exports, especially in IT and pharmaceuticals, could face the heat. Trump had described India as a “Tariff King.”
India was excluded from Trump’s first wave of tariff attacks that targeted Mexico, Canada, and China. But high tariffs on Indian exports are very much on the cards. Trump’s recent threat to impose 100% tariffs on BRICS nations, including India, should they undermine the US dollar, had worked. India has stated clearly that it would stick to the dollar, distancing itself from its BRICS brethren.
Trump’s other aim is to narrow trade imbalances, such as those the US has with China and India. India’s merchandise exports to the US account for over 18% of its total exports. In 2024, India-US bilateral trade amounted to US$118.2 billion. India’s exports to the US were $77.5 billion, while the US exported $40.7 billion to India, resulting in a US$36 billion surplus for India.
India’s exports to the US primarily consist of petroleum products, pharmaceuticals, telecom instruments, and electronic components. India’s imports from the US include petroleum crude, pearls, precious stones, electrical machinery, aircraft parts, and military equipment. Defence equipment imports from the US are expected to grow as India moves away from Russia in search of sophisticated weapons.
However, buying more from the US would depend on the commercial terms offered by US companies, particularly in the energy and petroleum sector. The US would like India to import more of its consumer goods or allow US investments in the retail sector. But Indian traders will resist that.
In the past, in response to US tariff hikes, India had imposed counter-tariffs. But the question is: Can this be done now, in the aggressive Trump era?
Pending US-India Defence Bill
The third area that Modi could take up with Trump may not be of immediate importance but is critical for India’s security and geopolitical interests in the middle and long run. India needs a firm defence pact with the US to keep China at bay and meet the threat from terrorists based in Pakistan.
The growing rapprochement between post-Hasina Bangladesh and Pakistan is also worrying New Delhi because an anti-Indian Bangladesh could well become a cockpit for Pakistani intrigues to destabilise the sensitive north-eastern states of India.
In July 2024, when the present Secretary of State Marco Rubio was a senator, he had presented a bill that was after India’s heart – the “United States-India Defence Cooperation Act.” The bill is yet to be passed. It is very likely that Modi will urge Rubio and Trump to pass it to seal the India-US defence relationship.
But Trump will demand reciprocal commitments from Modi on America’s defence interests vis-à-vis China. India will have to be cautious, as traditionally, it has been non-aligned and is not eager to engage in a hot war with China, whose economy is five times India’s. But Rubio’s bill is attractive.
Bill’s Provisions
The bill’s Statement of policy, says that it aims to; 1) support India in its response to growing threats to its internationally recognised land and maritime borders; 2) provide necessary security assistance to India to deter actions by foreign actors that violate India’s land and maritime borders, as recognised by the US; and 3) cooperate with India with respect to defence, civil space, technology, medicine, and economic investments.
The US will grant India an exception for “sanctionable” transactions under Section 231 of the Countering America’s Adversaries Through Sanctions Act (CAATSA). The sanctions imposed shall not apply with respect to a foreign person or an agency or instrumentality of a foreign state for transactions concerning capabilities currently in use by the armed forces of India.
The US Congress will offer expeditious consideration of certifications of letters of offer to sell defence articles, defence services, design and construction services, and major defence equipment to India.
Subject to the availability of appropriations, the Secretary of State is authorised to enter into an MOU with India to increase military cooperation, including joint military exercises, personnel exchanges, support for international peacekeeping missions, and enhanced strategic dialogue.
During each of the fiscal years 2025 through 2027, the delivery of excess defence articles to India shall be given the same priority as that given to other countries and regions under Section 516(c)(2) of the Foreign Assistance Act of 1961 (22 U.S.C. 2321j(c)(2)).
There will be authorisation of appropriations of US$2,000,000 for each of the fiscal years 2025 through 2027, which shall be used to provide international military education and training assistance for India.
Pakistan Factor
The bill says that if the Secretary of State determines in his report that Pakistan is providing assistance to militants in Jammu and Kashmir or engaging in other offensive uses of force against India, no security assistance under this Act or any other Act may be provided to Pakistan until a subsequent report is submitted.
Pakistan will have to dismantle supplier networks relating to the acquisition of nuclear weapons-related materials. It must combat terrorist groups that have conducted attacks against the US or coalition forces in Afghanistan, or against the territory or people of neighbouring countries. It must prevent al-Qaeda, the Taliban, the ISIS, and associated terrorist groups and offshoots, such as Lashkar-e-Taiba and Jaish-e-Mohammed, from operating in Pakistan, including carrying out cross-border attacks.
Pakistan should close terrorist camps in the Federally Administered Tribal Areas (FATA), dismantle terrorist bases of operations in other parts of the country, including Quetta and Muridke, and take action when provided with intelligence about high-level terrorist targets.
It is not clear if Indian External Affairs Minister Subrahmanyam Jaishankar sought further action on the bill in Congress when he met Marco Rubio after the inauguration of President Trump on 20 January. In its statements on the talks with Jaishankar, the US did not mention the bill, preferring to emphasise curbing illegal immigration from India.
An American decision on the bill will now await President Trump’s policies on India, the Indian subcontinent, and China. Trump may have his own way of looking at India and developments in Pakistan, Bangladesh, and China. He is the final authority on all matters.