India’s political landscape is currently ablaze with controversy as opposition parties criticize Prime Minister Narendra Modi. Their main grievance is Modi’s inability to secure a favorable trade deal with the United States. Amidst this tension, former President Donald Trump has intensified the situation by threatening a 25% tariff on Indian imports, with additional penalties looming if India continues its trade relationship with Russia.
Trump took to Truth Social to express his dissatisfaction with India’s trade practices, describing their non-monetary trade barriers as “strenuous and obnoxious.” He highlighted India’s consistently high tariffs on American imports as a barrier to better trade relations. “While India is our friend, we have, over the years, done relatively little business with them because their tariffs are far too high, among the highest in the world,” he stated.
Further expressing his discontent, Trump criticized India for purchasing the “vast majority of their military equipment from Russia.” He suggested this was indirectly financing the Russian invasion of Ukraine by buying large quantities of Russian oil. “All things not good!” he succinctly summarized his thoughts on India’s current trade situation.
In another post, Trump seemed to distance himself from India, indicating a lack of concern for their economic decisions involving Russia. “I don’t care what India does with Russia. They can take their dead economies down together, for all I care,” he remarked. This blunt dismissal comes as a blow to India, which was among the first to seek a trade deal following Trump’s “Liberation Day” tariff announcement in April.
Treasury Secretary Scott Bessent echoed Trump’s frustration, revealing that India’s trade team was challenging to negotiate with despite their public enthusiasm for a deal. “India came to the table early. They’ve been slow rolling things. So I think that the president, the whole trade team has been frustrated with them,” he commented. Bessent also criticized India’s purchase of Russian oil, stating, “They have not been a great global actor.”
American negotiators have reportedly been frustrated by India’s protectionist stance on agriculture, a sector vital to Modi’s political base. Indian Trade Minister Piyush Goyal emphasized the importance of protecting and promoting the welfare of Indian farmers and industries. “We will take all necessary steps to secure and advance our national interest,” Goyal declared, reinforcing the Modi administration’s commitment to domestic agriculture.
Agriculture is a critical issue for Modi’s government, as nearly 40% of the Indian population is employed in this sector. Indian officials have long defended their protectionism by asserting that domestically produced food meets higher standards than imports. Many observers believe that significant concessions on agriculture could weaken Modi’s government.
Opposition leader Rahul Gandhi has seized the opportunity to criticize Modi’s handling of trade issues, accusing the government of failing economically and diplomatically. “The government has destroyed our economic policy, has destroyed our defence policy, has destroyed our foreign policy,” Gandhi proclaimed. He echoed Trump’s critical view of the Indian economy, calling it a “dead” economy.
Gandhi’s statements have drawn sharp criticism from Modi’s BJP party, which accuses him of echoing “foreign propaganda.” BJP information technology leader Amit Malviya responded by highlighting India’s economic achievements. “Even amidst global slowdown, India remains the world’s fastest-growing major economy,” Malviya noted, countering Gandhi’s claims.
Within Gandhi’s own Congress Party, some members expressed discomfort with Trump’s harsh assessment. Congress lawmaker Rajeev Shukla called Trump’s remarks delusional, defending India’s economic strength. “Indian economy is in the top 5 of the world and one of the fastest-growing economies,” opposition MP Priyanka Chaturvedi added.
Analysts warn that underestimating the impact of Trump’s tariffs could have severe consequences for India’s exports. If India faces higher tariff rates than Asian competitors, it could significantly hinder economic growth. Some worst-case projections estimate a potential loss of 40 basis points in economic growth by next year.
Pakistan’s recent trade deal with the United States adds to the pressure on Modi, potentially amplifying opposition criticism. The Pakistani Finance Ministry announced a reduction in reciprocal tariffs, marking the start of a new era of economic collaboration with the U.S. President Trump described this partnership as an opportunity for development in various sectors.
India’s path to reconciliation with the U.S. may require abandoning Russian oil imports, a crucial step in defunding Russia’s war efforts in Ukraine. The Economic Times of India reported that Indian state refiners recently halted Russian oil purchases. This development might open doors for negotiations with the U.S., but further actions remain to be seen.
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