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 menace to impose main tariffs on Indian items as part of the commerce conflict 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 p.c levy on Indian exports to the US – are presently on pause for 90 days, till July 8, for all nations besides China. India, like all different nations, nevertheless, is presently being tariffed at 10 p.c.
The US is India’s largest buying and selling accomplice and the most important 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 crucial 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 together 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 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 acquired Vance alongside together 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 numerous areas of bilateral cooperation,” Modi’s workplace mentioned in a press release late at night time.
The leaders “welcomed the numerous progress within the negotiations for a mutually useful” bilateral commerce settlement, the assertion added, noting “continued efforts in the direction of enhancing cooperation in vitality, defence, strategic applied sciences and different areas”.
Nonetheless, the statements didn’t delve into the main points of the continued closed-door commerce negotiations.
Vance’s workplace mentioned in a press release {that a} bilateral commerce settlement presents a chance to barter a brand new and trendy one centered 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 extensively 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 crucial strategic accomplice 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 might be centered 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 harm to ongoing commerce, because the US is India’s largest buying and selling accomplice”.
But some critics fear that the Modi authorities’s guess on the PM’s bonhomie with Trump – they’ve each described one another as buddies – to resolve tariff tensions could be misplaced. Not like China, the European Union or Canada, India has averted responding to Trump’s threats with its personal countermeasures.
“The Indian facet has not proven any energy or resilience. All the 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 basically utilizing bullying techniques to attempt to extract as many concessions as potential,” Ghosh instructed Al Jazeera. “It is rather dangerous for India’s safety and financial 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 accomplice.
In 2024, the US pipped China to the highest slot: India-US bilateral commerce was price $129.2bn, per US authorities commerce knowledge. India-China commerce was price $127.7bn.
However commerce with China primarily contains of India importing from its bigger neighbour – India imported greater than $110bn price 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 formidable 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 keep a virtually 30 p.c share with virtually $13bn, they’re adopted by treasured 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 compounds, 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 conflict 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 exhausting to promote into India as a result of they’ve commerce limitations, very robust tariffs,” he mentioned.
He repeated that allegation in public, a minimum of 3 times, in March. “India expenses us huge tariffs, huge, you may’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 best way, they need to lower their tariffs means down now as a result of any person’s lastly exposing them for what they’ve completed,” Trump mentioned.
How excessive are India’s tariffs on US items?
Certainly, as Trump mentioned, India has already provided 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 p.c.
However even with these cuts, present tariff charges stay very excessive – and far increased than the tariffs that Indian items face within the US.
Whereas bourbon has acquired some aid, all different imported alcohol continues to be tariffed at 150 p.c. The responsibility on premium automobiles and bikes can go as much as 125 p.c, and agricultural merchandise like walnuts face a one hundred pc tariff.
India’s common tariff fee is 17 p.c, in contrast with 3.3 p.c by the US, as per a report by the Indian Council for Analysis on Worldwide Financial Relations (ICRIER).
“Probably the most placing distinction is within the agriculture sector, the place India’s tariffs are notably increased,” ICRIER mentioned within the February report.
The easy common tariff fee that India imposes on agricultural imports is 39 p.c, in line with ICRIER – pointing to the nation’s protectionist insurance policies. In contrast, the Indian assume tank discovered, “the US maintains comparatively low agricultural tariffs.” The easy common tariff fee that the US expenses on agricultural imports is 4 p.c.
The gulf is large in different sectors, too.
US pharmaceutical exports to India face a ten.9 p.c tariff. In contrast, Indian pharma merchandise face a tiny 0.01 p.c tariff whereas coming into the US.
US electronics exports to India are taxed at 7.64 p.c, whereas Indian electronics exports to the US face a mere 0.41 p.c tariff.
How are India-US tariff negotiations shaping up?
To this point, 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 tip 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, 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 state of affairs. 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 vital for the Modi authorities to be clear, throughout negotiations, about its political limitations.
“It is rather vital to place your playing cards on the desk and clarify your home state of affairs,” he mentioned. “On a global stage, we begin with a maximalist place. After which they arrive someplace in between.”
“However we at all times should safeguard our residents’ wants.”
And nowhere is that conundrum sharper than in agriculture.
Can India slash agriculture tariffs?
Within the final 5 many years, 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 illustration, India accounts for 40 p.c of worldwide rice exports.
However India has stored tariffs excessive to safeguard its farmers from imports which may in any other case flood home markets – almost 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 desires to stability that equation and has pressured India to cut 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 stored in the dead of night about these commerce negotiations – there isn’t any transparency; and in a federal setup like India, how can the federal government perform 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 Celebration of India, which is a part of the nationwide opposition.
“The Modi authorities has been sliding in a course of free commerce and slashing import duties – and if it contains 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 would possibly to Modi: Big 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 beneath the bus now [through a trade deal with Trump],” claimed Krishnan.
Any tariff waivers on agricultural imports would should be weighed towards the dangers they could pose to the livelihood of hundreds of thousands of Indian farmers, cautioned Dhar, the commerce economist.
“If we bow to the US calls for in negotiations, it’ll create an entire lot of financial, social and political issues for the federal government,” Dhar mentioned. “They can’t actually afford to danger the lives of hundreds of thousands of Indians.”
