Modis Deal With Trump: Submission Sold as High Strategy
M.K. Venu7 Feb 2026
Even the erstwhile East India Company might have envied India's one-sided trade deal with the United States.
The framework for an interim agreement on bilateral trade jointly released by India and the United States (US) does something unprecedented in the history of free and fair trade among nations. How can a nation give an omnibus commitment to buy USD 500 billion worth of goods at the rate of USD 100 billion each year over the next five years? Has free trade ever been conducted in this manner?
This entirely one-sided commitment by India to the US is problematic on many levels. At present, India has about USD 130 billion of two-way trade with the US and enjoys a trade surplus of about USD 45 billion. India's exports to the US are about USD 85 billion, and imports are USD 40 billion. Trump has had a problem with India having a substantial trade surplus with America, and he attributes this to unfair tariff and non-tariff barriers imposed by India, which prevent the US from exporting enough to India. Trump's advisor Peter Navarro is particularly focused on non-tariff barriers, which help protect India's big business groups.
In any free or open trade arrangement, such barriers are reciprocally brought down. Once barriers are removed, the two sides are expected to compete on the basis of their competitiveness. This is how things normally happen. But India is doing something unprecedented by not only bringing down tariff and non-tariff barriers but also assuring Trump that India would buy, over the next five years, USD 500 billion worth of items in sectors such as energy, food and agriculture, aircraft as well as its components, precious metals, coking coal, etc.
In fact, by doing so, the Prime Minister Narendra Modi government may be effectively wiping out India's trade surplus of USD 45 billion and replacing it with a growing trade deficit with the US. Even the erstwhile British East India Company might have envied such a one-way deal.
No wonder the US Agriculture Secretary, Brooke Rollins, confidently posted on X 48 hours ago that India's offer to open up its agri sector will help America wipe out its trade deficit of USD 1.3 billion with India in the agriculture sector. The framework for an interim agreement gives enough indication that this is very much a possibility.
Also read:
India-US Trade Deal: Five Takeaways From the White House Statements
Just imagine: at present, the annual trade between India and the US is about USD 130 billion. US exports are about USD 40 billion. As per the framework agreement, the US could up its exports from USD 40 billion to USD 100 billion or more from year one. In order to buy USD 500 billion worth of goods over five years, India will have to bunch up big orders that are immediately in demand domestically. The obvious target in this respect would be to divert crude imports from Russia – which at peak were over USD 45 billion annually – almost entirely to the US. This has been Trump's persistent demand and was reiterated recently by US Secretary of State Marco Rubio.
Diverting
Russian oil purchases is the lowest-hanging fruit. One doesn't know how Russia will view this move by India. Though this is not mentioned in the joint framework statement, it is pretty much implied in the very nature of the one-sided deal the Modi government is making.
This deal does not even have reciprocity because America will charge an 18% import tariff on India's exports, and India will give low single-digit tariffs to the United States, almost matching what India has offered the European Union (EU). Trump claimed that India has offered zero tariffs, but the framework statement does not mention 'zero'. However, it has to be as good, if not better, than what India is offering the EU.
Also read:
India-US Trade Deal: US Cuts Duty to 18%, India Slashes Tariffs on US Goods, Says Joint Statement
Commerce Minister Piyush Goyal claimed that India got a better deal than other Asian countries such as China, Vietnam, Indonesia, Malaysia, etc. The truth is India may have got 1 or 2 percentage points lower import tariff in the US, but the fact is, no East Asian economy has offered to dilute its trade surplus with the US like India has done. In fact, China, Vietnam and other countries have fortified their trade surpluses with the US in 2025. China has recorded a peak trade surplus of
USD 1.2 trillion. Vietnam and others are also holding up well.
One really doesn't know what the Modi government's grand strategy is in deliberately eroding India's trade surplus with the US. If there is some hidden geopolitical strategy at play, it is far from clear.
Also, Piyush Goyal's assurance that India's agriculture sector is fully protected flies in the face of the confident assertion by the US that it will wipe out its agri trade deficit with India. The framework statement mentions many food and agriculture categories, but one can assume this is not an exhaustive list. The government needs to give a detailed account of how the new deal will impact agriculture.
There is also a passing mention of ironing out many disputes in digital trade. There is immense pressure from the US on India's digital sovereignty. The US has serious disagreements with India's data localization policy and wants Indian data to be freely stored and accessed by US big tech companies like Google and Amazon in their jurisdiction.
On Intellectual Property Rights, India has already diluted its compulsory licensing regime in favor of voluntary licensing in collaboration with foreign pharma companies in the India-EU Free Trade Agreement (FTA). This was also done in the FTA with the United Kingdom finalised last May. So the US will not accept anything less favourable than that. If anything, it will want even more. There are many such concerns regarding India's economic and trade sovereignty about which there is complete lack of transparency. These issues will need serious deliberation – as and when the Speaker of the Lok Sabha decides to invite PM Modi back to Parliament.
This article went live on February seventh, two thousand twenty six, at forty-seven minutes past four in the afternoon.
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