The interim India–US trade deal marks a critical strategic pivot, transitioning the bilateral relationship from recent strain toward deeper cooperation. By significantly reducing US tariffs on Indian goods from as high as 50% to approximately 18%, the agreement restores the global competitiveness of India's key export sectors, including textiles, engineering, and chemicals. In exchange, India has committed to large-scale purchases of American energy, technology, and agricultural products totalling $500 billion over five years. Beyond simple commerce, the deal reinforces India’s geopolitical significance, aligning the two democracies against shifting global trade patterns and regional challenges.
India’s recent trade deal with the United States is a timely breakthrough that could reshape the wider trajectory of India–US relations. In many ways, this deal will act as a catalyst — not only for trade, but also for deeper strategic cooperation that is already beginning to show on the ground. It will also open up new possibilities in the relationship going forward. Importantly, it has emerged at a moment when the bilateral relationship had experienced noticeable strain in recent months, making the agreement all the more significant. As Lisa Curtis of the Center for a New American Security described it,the deal represents a “major step forward” and a “very welcome” development for bilateral ties, particularly after months of tension.
A Step Towards a Comprehensive Agreement
What makes this agreement especially important is the geopolitical moment in which it has come. Moreover, President Trump has become increasingly transactional in his engagement. Whether engaging with allies or competitors, trade has been deployed as a strategic instrument of pressure, frequently linking tariffs and economic coercion to wider political objectives. In fact, his second term has been marked by an even more hardline posture, with pressure tactics extending even to close NATO partners and long-standing allies. A review of several trade agreements concluded under this approach suggests that many have been disproportionately favourable to the United States.
For instance, in late October 2025, Washington concluded reciprocal trade agreements with Malaysia and Cambodia, alongside framework arrangements with Vietnam and Thailand, largely centred on expanding US market access and securing partner concessions. Similarly, in November 2025, the United States announced major trade frameworks with several Western Hemisphere partners, including Argentina, Ecuador, Guatemala, and El Salvador, again emphasising tariff reductions and regulatory adjustments that strongly advanced American commercial priorities. In July 2025, the US also concluded a trade framework with Japan, widely seen as heavily favouring US interests, which contributed to political challenges for Japanese Prime Minister Shigeru Ishiba. Many countries have also been pressured to make significant concessions in these negotiations, often under the threat of tariffs or unilateral measures.
In such a climate, securing a trade arrangement with Washington that is not overtly one-sided constitutes a notable achievement for India. Seen within this broader framework, India has managed to safeguard its core interests while sustaining the momentum of an increasingly consequential bilateral partnership.
It is also important to note that what has been announced so far is an interim trade framework, which both sides see as a major step toward a broader bilateral trade agreement. Announced on February 6, 2026, the interim framework lowers US tariffs on Indian exports to around 18 percent, eases duties for key sectors, includes reciprocal reductions on US goods, and sets the stage for a formal agreement by mid‑March to strengthen economic and strategic ties. While the final comprehensive deal is still being negotiated, this framework itself marks a significant breakthrough.
Strategic Implications and Regional Perceptions
Over the past months, the US had imposed serious tariff measures and even threatened punitive actions linked to India’s import of Russian crude oil. At the same time, Trump’s public outreach toward Pakistan — including repeated praise for its leadership — created discomfort in New Delhi and emboldened narratives in Islamabad. In South Asia, such gestures carry disproportionate symbolic weight, especially in a country like Pakistan, where both civilian and military leadership have often sought to use the “US card” as leverage against India. Even limited American praise or engagement tends to reinforce anti-India postures and domestic narratives of strategic relevance, particularly in a feudal-style society like Pakistan, where individuals often carry more influence than institutions and personal statements can outweigh formal policies.
In this context, the trade agreement was needed not merely as an economic arrangement, but as a timely strategic stabiliser — a means to recalibrate the bilateral relationship at a moment when political signalling, perceptions, and regional optics carried unusually high stakes. And the shift is becoming clearer: Trump’s harsh rhetoric toward India has eased, and diplomatic engagement has intensified, with high-level meetings gaining renewed momentum. In fact, after the signing of the trade deal, India’s participation in key US-led platforms has also increased. External Affairs Minister S. Jaishankar’s recent official visit to the United States — where he met senior American leadership, including Secretary of State Marco Rubio, and took part in the Critical Minerals Ministerial — underlines the growing strategic-economic convergence between the two sides. Discussions during the visit reportedly extended beyond trade to include critical minerals cooperation, energy security, defence, nuclear cooperation, and emerging technologies, reflecting a widening agenda. At the same time, both countries have moved forward with an interim trade framework involving tariff adjustments and commitments on supply chain resilience, signalling concrete follow-up beyond the headline agreement.
This is why India’s trade deal with the US carries significance beyond economics. By strengthening bilateral engagement and establishing tangible benefits, it not only recalibrates perceptions in South Asia but also reinforces India’s centrality in the broader strategic landscape of the Indo-Pacific. It is not only about market access or tariff numbers — it is also about symbolism, strategy, and long-term positioning.
The regional ripple effects of this shift are already becoming visible. Evidence of this can be seen most clearly in the Pakistani media, which is already debating whether Trump simply used the “Pakistan card” as leverage — only to ultimately turn back toward India once negotiations concluded. Critics and commentators in Pakistan have openly expressed frustration at the contrast between Islamabad’s expectations and New Delhi’s outcome. Former Pakistan Tehreek-e-Insaf (PTI) minister Hammad Azhar wrote on X that “Foreign policy in the 21st century isn’t about optics or personal relationships. It’s about leveraging economic strength, tariffs, and market access. India’s recent trade deals with the EU and the US prove the point. Sycophancy & photo ops are useless.” Other commentators noted that Trump treated Pakistan like “a shopkeeper deal” while India walked away with the 18 % tariff reduction — an outcome widely seen domestically as a strategic embarrassment for Islamabad. Even Pakistan’s Defence Minister Khawaja Asif publicly said in parliament that the United States had “used Pakistan worse than toilet paper” and then discarded it, underscoring deep frustration in Islamabad with its past engagement with Washington.
Economic Relief and Strategic Autonomy
In fact, one of the most visible outcomes is that India now faces a recalibrated tariff burden, down to around 18 percent, a sharp reduction from the much higher punitive levels seen earlier. This provides immediate relief to Indian exporters in key sectors such as textiles, leather, chemicals, machinery, and other labour-intensive industries that had been under pressure during the recent tariff escalation.
There are also expectations that once the deal is fully formalised, several major Indian export categories — including pharmaceuticals, gems and jewellery, and aircraft-related components — could move toward even lower duties, with some reports suggesting the possibility of zero-duty access for selected items. Such steps would significantly strengthen India’s export competitiveness in the US market and reinforce the broader economic momentum of the partnership.
Some critics have asked whether this agreement is as significant as India’s recent trade deal with the European Union, often described as a historic “mother of all trade deals.”
But the India–US deal matters in a different way.
The United States remains the world’s most influential economic and strategic power. A trade agreement with Washington does not remain confined to commerce — it strengthens cooperation in defense, technology, geopolitics, and regional strategy.
Most importantly, India did not open up its sensitive agriculture and dairy sectors fully, despite strong American pressure. Instead, India negotiated carefully, allowing only selected items and ensuring that domestic priorities were not sacrificed. Framework agreement also shows that India has maintained clear safeguards in agriculture, including resisting demands related to genetically modified imports.
While there have been claims, notably by US President Donald Trump on Truth Social, that India has stopped importing Russian oil, these reports are not independently verified. Trump stated that India would halt purchases of Russian crude as part of a trade agreement with the United States, alongside tariff reductions and increased US energy purchases, but India has not publicly confirmed any such commitment. Russian officials have also rejected the claim, stating they have received no official communication from India about stopping oil imports. In fact, the Ministry of External Affairs has emphasised that energy security is India’s top priority, and decisions on oil sourcing are guided by national interest, consumer welfare, and market considerations, rather than external pressure. Even if Indian refiners have reduced new bookings of Russian crude in recent months, such decisions are largely driven by economic considerations, pricing, and energy security, not geopolitical compulsion. As Harsh V. Pant of the Observer Research Foundation noted, “The US may push India to reduce engagement with Moscow, but India values its defence and energy ties with Russia too much to compromise them.” Moreover, the interim US–India trade framework has been agreed upon, but the comprehensive trade deal is still under negotiation, and the publicly available framework does not include any binding commitments regarding Russian crude oil.
Navigating Trump’s Negotiating Style
One of the most notable aspects of this deal is how India handled Trump’s negotiating style.
Trump’s trade diplomacy is often one-sided and aggressive. Many countries have rushed into deals under pressure. India did not. In fact, Raymond Vickery, former US Assistant Secretary of Commerce,praised India’s approach, noting that India “did better than most other nations in having a logical and deliberate process rather than succumb to the chaos which President Trump favours.”
India took its time. It moved step by step, signing an interim arrangement first, understanding the risks of rushing into a full agreement too quickly. This reflects maturity and strategic patience. Pakistan political analyst Najam Sethi also praised India’s approach, statingthat “India doesn’t take dictation from anyone”, highlighting New Delhi’s ability to negotiate on its own terms and protect its national interests.
India’s negotiating team deserve credit for standing firm while still finding common ground.
The role of the recently appointed US ambassador has also been significant. Sergio Gor, the new US Ambassador to India, has played an important role in facilitating the interim trade framework and restoring momentum in the partnership. His public engagement and consistent outreach, highlighting the “limitless potential” of India–US ties, suggest a genuine commitment to strengthening the relationship. Gor has actively engaged on issues including semiconductors, electronics manufacturing, and supply chain resilience, and he envisions a future where the India–US relationship deepens into a resilient, strategic partnership across trade, technology, and defence, underpinned by high-level engagement and shared democratic values.
Strong relations with the US open enormous opportunities for India — not just economically, but strategically, regionally, and globally. Engagement with a superpower like the US provides leverage across multiple strategic theaters, allowing India to use trade agreements, defense cooperation, and technological collaboration to enhance its influence in various regions and on global platforms. Trade agreements should not be viewed in narrow, binary terms. Their impact is complex and multi-layered, shaping diplomacy, security cooperation, technology flows, and overall geopolitical alignment.
Comparisons are also being made with Bangladesh, which reportedly secured zero tariffs on certain products. But such deals often come with deeper costs. Bangladesh signed this opaque deal on 9 February 2026, just a few days before its elections, raising questions about transparency and the terms involved, including a non-disclosure agreement. Those celebrating the zero tariffs on certain textiles and apparel fail to see what Bangladesh had to offer in return — effectively surrendering significant control to the US. More importantly, the zero-duty access is conditional, tied to using US-sourced inputs, and Bangladesh has also agreed to open its market further to American agricultural and industrial products. This could weaken domestic farmers, increase dependency, and erode economic sovereignty over time. For a country like Bangladesh, where a large part of the population depends on agriculture, the long-term consequences could be severe.
India’s deal, by contrast, has emerged from long negotiations, democratic scrutiny, and strategic calculation. It is measured, balanced, and rooted in national interest.
Future Prospects and Export Competitiveness
Perhaps the most important takeaway is that India is growing increasingly confident in trade diplomacy. Having successfully navigated complex negotiations with the United States, India is now better positioned to pursue additional trade agreements in the future. This interim framework sets a valuable precedent, builds negotiation experience, and strengthens India’s economic positioning in a competitive global order. According to Axis Direct, the India–US trade deal is structurallypositive for India’s medium‑term growth and external stability, likely boosting exports, supporting manufacturing investment, and attracting foreign direct investment. Strengthened economic fundamentals, the report notes, will give India greater leverage in negotiating future agreements.
Indian producers and farmers stand to benefit from expanded export opportunities, improved competitiveness, and access to one of the world’s largest markets.
At the same time, it is important to recognise that several elements of this deal have drawn scrutiny. This is not the final agreement — India has so far signed only an interim framework. Several provisions have been revised during negotiations, reflecting ongoing flexibility and the evolving nature of the deal. For example, language on key commitments was softened from “India will buy” to “India intends to buy,” underscoring that these are intentions rather than binding obligations. Other changes included the removal of references to “certain pulses” from the factsheet and clarifications regarding the digital services tax, indicating continued discussions rather than finalised commitments. Many aspects of the agreement remain under negotiation, making it clear that this is very much a work in progress. Observers should also distinguish between public statements made by President Trump and the official agreement text, as Trump has a tendency to exaggerate or overstate outcomes. These revisions highlight the importance of focusing on the written framework rather than political statements alone.
Ultimately, the India–US trade deal is not merely about tariffs or commerce. It is a strategic signal — reinforcing India’s significance in American calculations, reshaping South Asian geopolitical narratives, and strengthening the long-term partnership between the two democracies. Rather than a story of submission, it is a story of negotiation, patience, and strategic foresight. In today’s transactional global environment, India has secured not only a trade agreement, but also a geopolitical advantage.
Imran Khurshid, Ph.D. in Political Science from the University of Kashmir, specializes in Indo-Pacific studies and South Asian security issues. He is an Associate Research Fellow at ICPS. The views expressed here are his own.
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