With the bilateral trade agreement between the United States and India on hold, President Donald Trump has shifted from a positive tone to issuing threats of imposing tariffs as high as 500% on Indian products. The threats primarily target India’s purchase of Russian oil. The rhetoric intensified following recent podcasts by US Commerce Secretary Howard Lutnick, who claimed that last year’s deal failed because Prime Minister Narendra Modi did not call Trump directly to finalize the agreement, despite prepared negotiations.
India Dismisses US Claims
India promptly rejected Lutnick’s version of events. Ministry of External Affairs spokesperson Randhir Jaiswal clarified that discussions began on February 13 of the previous year and included multiple negotiation rounds that brought both sides close to an agreement. Jaiswal emphasized that the eight interactions between Modi and Trump in 2025 were focused on broader collaboration rather than a single trade deal.
Economists Downplay Impact of Tariffs
Economist Ashima Goyal, former member of the RBI Monetary Policy Committee, dismissed fears of significant economic fallout. In an interview with Business Today, she noted that India is not as reliant on the US market as countries like Japan or South Korea. Emerging markets, contributing over 50% of global growth, offer India alternative avenues for trade, reducing the potential impact of US tariffs.
Emphasis on Domestic Sensitivities
Goyal stressed the importance of protecting domestic interests, particularly farmers, while negotiating any trade agreement. “We will not do it at the expense of our farmers. They must know our sensitivities,” she said. She added that any deal should be concluded over time in a balanced manner, without hastily compromising key sectors.
India’s Resilient Growth and Market Diversification
Despite the pressure from Washington, India has maintained resilient economic growth and continues to pursue free trade agreements with other partners. The country’s strategy emphasizes market diversification and reducing dependence on a single market while balancing international partnerships with domestic priorities.