Deal or No Deal? Inside India's high-stakes trade gamble with the US

India Today

7 hours ago

When Indian and American negotiators sat across the table in New Delhi from June 5 to 7, the atmosphere was businesslike but charged. The stakes were higher than ever. On one side stood President Donald Trump, newly re-elected, charging into his second term with economic nationalism as his war cry. On the other, Prime Minister Narendra Modi, having just secured a third term, was recalibrating India's global economic engagement with a sharpened sense of sovereignty. The long-pending limited trade deal between India and the United States—which had simmered unresolved since Trump's first tenure—was back on the table, but under new political compulsions and strategic calculations. India and the US aim to double bilateral trade to $500 billion by 2030.For Washington, this deal is no longer about symbolism or goodwill. The Trump administration, determined to rewrite global trade on its own terms, sees the Indian market as both an untapped export opportunity and a strategic wedge against Chinese dominance. But unlike in earlier phases, there is little appetite for compromise in Trump's America. Every trade pact must now deliver visible benefits for American jobs and exporters. Anything less risks being branded a loss—especially in the high-decibel domestic climate leading into the 2026 US midterms. The President has repeatedly signalled that past arrangements were too generous to countries like India, which he claims have long taken advantage of American openness. With this in mind, US trade officials arrived in Delhi with a short but pointed agenda—remove tariff barriers, open up sensitive sectors, and secure digital and regulatory commitments that align with corporate America's interests.advertisementIndia, however, is not the same player it was during earlier trade rounds. Over the past few years, New Delhi has rebuilt its strategic and economic confidence. Its global standing has improved, its exports diversified, and its domestic market deepened. But more importantly, there has been a clear shift in how trade is approached in policy circles—moving from passive liberalisation to active negotiation. India is no longer eager to sign deals merely for optics or as diplomatic sweeteners. The experience of asymmetric free trade agreements in the past, and the lessons from rejecting the Regional Comprehensive Economic Cooperation (RCEP), have deeply informed the present stance.As of 2025, India is in talks with major partners, including the EU and ASEAN, while also exploring new agreements with Africa, Latin America and the Arab Gulf. The emphasis now is on aligning trade with national development goals, safeguarding regulatory space, and building domestic capabilities in key sectors such as digital infrastructure, clean energy and pharmaceuticals.advertisement
What makes this negotiation different is not just the hardened positions on both sides but the strong presence of ideological and institutional voices in India pushing back against what they perceive as a lopsided deal. Over the past months, affiliates of the Rashtriya Swayamsevak Sangh, including the Swadeshi Jagran Manch, have flagged several red lines for Indian negotiators. These are not merely academic critiques but deeply rooted ideological objections that enjoy resonance in key segments of the ruling political ecosystem. Encouragingly for them, India's official position appears to be largely aligned with many of their concerns.Meanwhile, another letter from 20 former officials—including former cabinet secretary K.M. Chandrasekhar, G.K. Pillai, Ujal Singh Bhatia, Amarendra Khatua and Sanjaya Baru—along with some economists, cautioned New Delhi to 'walk away' from a lopsided deal. They note that without a trade promotion authority in the US, any concessions would be limited to Trump-era executive tariffs—not durable legal changes—and that compromising India's core interests today could result in long-term sovereignty loss. In short, they argue that temporarily closed doors on US markets may be better than structurally weakened regulatory autonomy.Various Sangh affiliates have their own set of red flags, but at the top of the list is digital sovereignty. The US wants binding commitments on cross-border data flows, curbs on data localisation and relaxed regulation for American digital firms operating in India. Indian negotiators have reportedly resisted these asks. There is a growing recognition in New Delhi that accepting such provisions would jeopardise the integrity of India's digital public infrastructure—UPI, Aadhaar, DigiLocker, ONDC—all of which are premised on public control over data and technology ecosystems. The fear is that Big Tech companies could use trade deals as Trojan horses to dismantle domestic regulatory autonomy, reduce accountability and monopolise critical sectors. For the Swadeshi camp, this is not just a technical debate—it is about ensuring that India's digital future is not outsourced to Silicon Valley giants under the garb of free trade.advertisementAnother major point of friction lies in the area of intellectual property rights, especially in pharmaceuticals. The US pharma lobby has long pressured India to adopt TRIPS-plus provisions—ranging from extended patent terms and patent linkage to the dilution of compulsory licensing. But for India, these are red lines. The country's success as the world's leading supplier of affordable generics, including vaccines, depends on a flexible intellectual property regime that prioritises public health over monopolies. The battle over Section 3(d) of the Indian Patents Act—designed to prevent evergreening of patents—is emblematic of the larger ideological divide. Domestic lobbies and health policy experts have argued that compromising on this front would not only increase the cost of medicines for Indian citizens but also damage India's global standing as the pharmacy of the Global South.advertisementThe agriculture front has also emerged as a flashpoint. The US has pushed for greater market access for genetically modified crops, chlorine-washed poultry and hormone-treated dairy products. For Indian negotiators, this is politically and economically sensitive territory. Indian farmers operate in vastly different conditions—small holdings, traditional practices and a deep reliance on biodiversity. Introducing GMOs or industrial food products without adequate safeguards could destabilise local supply chains, damage soil health and displace small farmers. The RSS and its affiliates have repeatedly warned against diluting the precautionary principle in food safety, pointing out that long-term food sovereignty cannot be compromised for short-term tariff relief.The Trump administration's insistence on restoring tariff benefits under the Generalized System of Preferences (GSP) only if India allows market access for such products has complicated the talks further. Indian negotiators have remained firm, citing consumer safety, regulatory autonomy and domestic sensitivities. With Washington pushing hard for its agro-export lobbies, especially on GM corn, soy and dairy, Indian officials worry such concessions could open the floodgates for unsustainable imports and threaten food security. This deadlock underscores the deeper tensions between trade liberalisation and India's developmental and agricultural imperatives.advertisementAnother contentious American demand is the inclusion of an Investor-State Dispute Settlement (ISDS) mechanism, which would allow US firms to sue the Indian government in international arbitration forums if they believe domestic laws have hurt their profits. The Indian side has reportedly flatly rejected this, consistent with its stance in other FTAs over the past decade. ISDS provisions are viewed as a serious threat to India's sovereign policy space and judicial process. Past experiences with multinational disputes have made it clear that such mechanisms often bypass domestic courts and leave the country exposed to disproportionate liabilities. The Swadeshi camp argues that any dispute resolution framework must be reciprocal, limited in scope and rooted in Indian legal institutions.Beyond the big-ticket issues, there are more subtle but equally significant concerns. American negotiators have insisted on liberalisation in strategic sectors such as e-commerce, defence production, clean energy and agri-logistics. While India has opened selectively in these areas, full-scale liberalisation without safeguards could be disastrous for local firms, cooperatives and startups. The domestic lobby advocates a calibrated approach—one that combines FDI caps, localisation mandates and domestic value-addition norms to protect India's long-term industrial interests.advertisementThere is also unease about the growing trend of inserting side chapters in trade agreements—covering labour standards, gender rights, environmental norms and civil society engagement. While these may appear progressive, Swadeshi voices caution that they often serve as pressure points for future litigation or reputational coercion. The preference is for India to evolve its own ESG standards, rooted in its civilisational values, livelihood priorities and federal structure—not adopt imported frameworks that may not suit Indian realities.Finally, there is growing awareness that trade liberalisation often overlooks cultural and traditional knowledge systems—Ayurveda, handicrafts, tribal knowledge and local foods—that don't fit into Western IPR definitions. These represent real economic capital for India, particularly for rural and indigenous communities. RSS affiliates have pushed for stronger protection of geographical indications, cultural commons and rural creative industries within trade negotiations.This rising chorus of Swadeshi caution has not gone unnoticed. Many of India's recent trade decisions—including the cautious pace of the FTA with the UK and the shelving of RCEP—reflect a deeper institutional consensus that unbalanced deals are no longer acceptable. Recent warnings by retired trade negotiators and policy veterans have only added weight to this stance. They argue that New Delhi must be ready to walk away if the deal appears skewed, urging the government not to trade long-term autonomy for short-term optics. The sentiment is increasingly shared by officials across ministries: India can afford patience, but not policy capture.Meanwhile, the American side is feeling the pressure to deliver. Trump's trade doctrine, powered by his electoral calculus, leaves little room for nuanced diplomacy. Deals must be announced with a bang. Benefits must be quantifiable. And foreign governments must be shown to have conceded. In such an environment, India's insistence on a balanced, development-friendly deal risks being read in Washington as resistance. Yet New Delhi appears ready to absorb that cost, preferring friction over folly.The latest round in New Delhi ended without a final breakthrough, but with enough movement to suggest the door remains open. Both sides are expected to hold another round later this summer. But the message from India is increasingly clear: the era of trade policy as a diplomatic concession is over. What replaces it is a new framework—pragmatic, sovereign and deeply aware of the ideological choices embedded in every clause. For a country aspiring to be Vishwaguru, mastering the art of tradecraft is no longer optional. It is a strategic necessity.Subscribe to India Today Magazine