US-India partnership under Trump 2.0: Addressing trade & technology impediments

With Trump’s return, New Delhi can proactively leverage its strengths to address challenges in India-US trade and technology partnership
Kashish Parpiani
During President Donald J. Trump’s previous term (2017-21), there was an overt attention on India-US trade issues. This pertained to India’s trade surplus with the US (around USD 35 billion); market access issues with India (for US dairy, pharma & agricultural exports); and US suspension of Generalized System of Preferences (GSP) benefits for Indian exports.
Nevertheless, on India-US strategic ties under Trump, the relationship went from strength to strength. Particularly on defense and strategic aspects, this included finalization of new interoperability agreements (COMCASA, BECA), continuity on defense exports (AH-6E Apaches, CH-47 Chinooks, MH-60R Seahawks), new precedents on defense technology transfers (STA-1 designation), etc.
Compartmentalized approach to trade
The constructive record on India-US strategic partnership was a direct result of President Donald Trump and Prime Minister Narendra Modi’s efforts to insulate strategic priorities from differences on trade and commercial ties.
Most notably, this included the two nations engaging on strategic issues under the India-US 2+2 Ministerial Dialogue (between India’s Minister of External Affairs, India’s Minister of Defense, US Secretary of State, and US Secretary of Defense). Earlier, India and the US engaged under the India-US Strategic and Commercial Dialogue (S&CD), where trade and strategic issues would often get interlinked.
This compartmentalized approach continued under US President Joe Biden, with the revival of US-India Trade Policy Forum, US-India Commercial Dialogue, and US-India CEO Forum. Together with the 2+2 Ministerial Dialogue, these platforms serve as dedicated channels for cooperation – to ensure that divergences in one area do not impede progress in another.
Continuity on this approach also yielded results with India and the US finalizing a framework agreement on ‘2 vs. 2 Agri market access issues’. This pertained to addressing market access issues for Indian mangoes & pomegranates and US cherries & alfalfa hay.
Shedding non-aligned hesitations
Over the past few years, the scramble for ‘future-proofing’ globalization has underscored the securitization of supply chains, particularly in the critical domains of telecommunications, semiconductors and clean energy technologies.
Amid various approaches under terms like ‘de-risking’, ‘friend-shoring’, ‘China+1 strategies’, India has embraced issue-based multi-alignments.
This is reflected in India’s swift finalization of mutually-beneficial trade agreements with Australia, European Free Trade Association (EFTA), and the United Arab Emirates (UAE). In addition, negotiations are reportedly underway with the UK, the EU, Israel, Oman, Peru and the GCC. This raises India’s prospects to emerge as what IMF terms as a ‘connector country’, which offers a gateway to the world apart from its own sizable market.
This complements New Delhi’s push for export-led growth, which has been on an encouraging trajectory. For instance, India registered record exports in 2023-24 at USD 778 billion, up from around USD 500 billion in 2020-2021. As per estimates by India’s Commerce Ministry, by 2030, exports from India will breach the USD 2 trillion-mark. Wherein, goods export of USD 1 trillion will oversee CAGR growth of 11-12% and services export of USD 1 trillion will register CAGR of 18-19%.
Trump’s trade tirade
With Trump recently reiterating his intention to impose reciprocal taxes and accusing India of charging “high tariffs”, New Delhi is reportedly considering tariff cuts on certain US products. This preemptive action could possibly cover products like pork, high-end medical devices (like pace makers), and luxury motor-cycles (primarily Harley Davidson motorcycles).
This would pick up from the limited progress made under the previous Trump administration. In 2020, India and the US were in talks for a ‘mini deal’, which was reportedly aimed at eliminating India’s restrictions on imported electronics, medical devices and farm goods – in exchange for the US restoring India’s benefits under the GSP.
Moreover, the proactive effort to cut tariffs may also reportedly include assurances by New Delhi to continue the pace of recent increase in India’s import of US energy, defense platforms, and civilian aircraft.
This could also present India with fertile ground for underscoring its de-risking credentials.
With its recent trade agreements and impetus to export-led growth, New Delhi may seek to attract US businesses looking for dependable regulatory environments and politically-aligned destinations to safeguard supply chains. Such an effort could also benefit from Trump’s threat to impose 60% tariffs on China.
High promise of tech cooperation
The synergy for increased India-US cooperation on supply chains is most apparent in the tech domain. As NITI Aayog’s Arvind Virmani recently observed: “It is in the interest of the US and India that more of critical manufacturing or sensitive manufacturing be done in India rather than China.”
Under Biden, India and the US raised the bar on bilateral tech partnership with the India-US initiative on Critical and Emerging Technologies (iCET). This platform offers an overarching framework for bilateral tech cooperation, to include emergent domains like clean energy technologies and Artificial Intelligence (AI), and also lend direction to India-US defense tech cooperation in the wider context of bilateral synergies.
With its two iterations in January 2023 and June 2024, iCET has already registered considerable progress – from signing research partnerships for early-stage innovation, identifying prospects for joint funding, to announcing workforce development programs and joint readiness assessments. Overtime, iCET has the potential to help develop mutually-beneficial bridges between Indian and American tech ecosystems.
However, there are foreseeable impediments to the high promise of iCET.
For instance, Washington’s efforts to stem Beijing’s tech strides are increasingly impacting US allies and partners. This ranges from the Biden administration’s effort to seek cooperation from allies (like Japan and the Netherlands) to restrict flow of chip-making tech to China to preconditioning US investments in partner nations (like the UAE) in exchange for them severing links with Chinese suppliers (like Huawei).
With US-China tech competition expected to only further intensify under Trump, this trend could pose new impediments to India-US iCET, chiefly on sharing of critical technologies.
Hence, under India-US iCET, there is now scope for the platform to also assume a troubleshooting mandate – chiefly on coordination of export controls overseen by the US Commerce Department’s Bureau of Industry and Security (BIS) and other entities like the US Treasury Department.
Such an additional mandate for the iCET will strengthen the proactive disposition of India-US tech cooperation – by developing an ahead-of-the-curve screening mechanism to flag emergent divergences.
Views expressed in this commentary are personal.