Historic Or Capitulation? India-US Trade Deal Sparks Political Divide

Union ministers and government allies quickly praised the agreement as a landmark achievement. Prime Minister Narendra Modi expressed delight on social media, thanking Trump for the reduced 18% tariff on Made in India products and emphasizing mutual benefits for the populations of both democracies, while highlighting opportunities for cooperation and global stability. Home Minister Amit Shah described it as a "big day" for India-U.S. relations and a historic elevation of the strategic partnership. Commerce and Industry Minister Piyush Goyal called it a landmark step toward shared prosperity, unlocking doors for Indian farmers, MSMEs, entrepreneurs, and skilled workers under the Make in India initiative. Other NDA voices echoed the sentiment, framing it as a win for two like-minded democracies and a pathway to stronger economic alignment.

The deal, effective immediately, sees the US lowering its reciprocal tariff on Indian goods from 25% to 18%, while rolling back an additional punitive 25% duty previously linked to India's Russian oil purchases—effectively cutting the overall burden from around 50% in some cases. Trump announced that India has committed to reducing tariffs and non-tariff barriers on U.S. goods (potentially to zero in certain areas), increasing purchases of American energy, technology, agriculture, coal, and other products (with figures cited exceeding $500 billion), and shifting away from Russian oil imports toward U.S. and possibly Venezuelan sources. The pact aims to mend strained commercial relations amid earlier tariff tensions and follows recent progress in India's trade deals with the EU and others.

Congress leaders, however, focused on the announcement's origin in Washington and alleged undue leverage. Senior leader Jairam Ramesh accused PM Modi of having "capitulated finally," pointing to a pattern where key decisions—like updates on oil purchases, past operations, and now this trade pact—appear to emerge first from the US side. He dubbed the approach "Trump-nirbharta" (dependence on Trump), quipped that "in Washington, clearly Mogambo Khush Hai" (a Bollywood reference to US satisfaction), and dismissed it as unlikely to be the "father of all deals" (a jab at earlier government praise for other pacts). Ramesh stressed that full details remain awaited and questioned the optics of the Prime Minister's engagement.

The agreement has sparked market optimism, with expectations of gains for export-oriented sectors like pharmaceuticals, textiles, chemicals, engineering, and auto ancillaries, as India's tariff edge over competitors (e.g., lower than Vietnam at 20% or China at 34%) could enhance pricing power and volumes. Critics, though, highlight potential strategic trade-offs on energy autonomy and note discrepancies between Trump's claims (e.g., firm oil halt and massive purchase commitments) and Modi's more measured response, which focused solely on tariff relief. While the deal de-escalates immediate tensions, full implementation details, formal texts, and long-term implications are still unfolding amid ongoing political polarization in India.