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India and US Hail Progress in Trade Negotiations Amid Tariff Concerns
Prime Minister Narendra Modi and US Vice President JD Vance have acknowledged “notable advancements” in discussions aimed at a bilateral trade pact. This agreement is viewed as crucial for India to mitigate potential steep tariff increases previously announced by President Donald Trump. The ongoing trade negotiations and potential for enhanced economic cooperation are key areas of focus during Vance’s visit.
Vance’s Visit to India
Vice President Vance, accompanied by his wife, Usha Vance, and their children, arrived in New Delhi on Monday for a four-day trip. The visit combines crucial trade talks with family cultural excursions. Railways Minister Ashwini Vaishnaw greeted the delegation at the airport. Vance received a formal welcome that included a military salute and the playing of the US national anthem.
Positive Outlook After High-Level Meetings
The optimistic tone regarding a potential trade accord follows meetings between Modi and Vance, including both individual and delegation-level discussions held at the Prime Minister’s residence in New Delhi. Subsequently, Modi hosted a dinner for Vice President Vance and his family at his official home.
Urgency to Finalize Trade Deal
With the deadline approaching on President Trump’s 90-day pause on increased duties on Indian goods, negotiators from both countries are working diligently to finalize an initial, limited trade agreement before July. The aim is to secure a more comprehensive deal by autumn. Without an agreement, tariffs are poised to escalate significantly, rising from a base of 10% to a substantial 26%.
Political Momentum and Washington’s Intent
While no formal deals are anticipated this week, Vance’s presence provides political impetus to the ongoing dialogue, signaling Washington’s dedication to reaching an agreement. Finance Minister Nirmala Sitharaman is currently in Washington, advocating for India’s interests and pushing for a swift resolution.
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Details of Potential Trade Agreement
According to a press release from the Prime Minister’s office, both leaders “expressed satisfaction with the considerable headway in negotiations for a mutually advantageous India-US Bilateral Trade Agreement designed to benefit citizens in both nations.”
India has already lowered tariffs on specific American products, with expectations of further extensive reductions. A prospective agreement could encompass Indian procurement of US-manufactured Javelin missiles and Stryker vehicles, alongside tariff concessions on a significant portion of India’s $41.8 billion (£31.2 billion) worth of imports from the United States.
Growing Bilateral Trade Relations
The United States is India’s primary trade partner, with bilateral commerce exceeding $190 billion (£142 billion). During Prime Minister Modi’s goodwill visit to Washington in February, following President Trump’s return to the White House, both leaders pledged to more than double trade volume to $500 billion (£374 billion), envisioning a “mega partnership,” as described by Modi.
Behind-the-Scenes Negotiations
Negotiations have been progressing constructively, guided by a general framework established during Modi’s visit to Washington.
Cooperation Beyond Trade
Modi and Vance also “acknowledged efforts to strengthen collaboration in energy, defense, and strategic technologies,” as stated by the Indian side.
US Perspective and Priorities
While there was no immediate statement from the US side, the White House previously indicated the visit would concentrate on “shared economic and geopolitical priorities.”
Elon Musk’s Potential Investment
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Concerns Over Trade Liberalization
However, tariff reductions face domestic opposition. The All India Kisan Sabha (AIKS), India’s oldest farmers’ union, cautions that trade liberalization could negatively impact farm incomes, particularly in the dairy industry. The AIKS, associated with India’s Communist party and claiming over 16 million members, has criticized US Commerce Secretary Howard Lutnick for alleged “coercion” to include India’s heavily subsidized agriculture sector in the trade agreement.
Government Sensitivity to Farmer Concerns
The Modi administration remains aware of the large-scale farmer protests in 2020–21, which led to the revocation of contentious farm legislation.
Visa Tensions
Student and H-1B visas are also creating friction. Indian Congress leader Jairam Ramesh referenced US data indicating that Indian nationals constituted half of 327 recent international student visa revocations. Ramesh highlighted “growing unease and worry” among Indian students in the US.
Indian citizens received a significant 70% of all US H-1B visas in the past year, exceeding 200,000. Concerns about visa re-entry have led many to postpone or cancel trips home.
The Indian statement did not specify if visa concerns were discussed with Vance. However, External Affairs Ministry spokesperson Randhir Jaiswal stated last week that “all relevant issues” would be addressed.
Modi’s Invitation to Trump
Modi also extended “warm greetings” to President Trump and expressed anticipation for the president’s visit to India later this year, according to the statement. Modi had invited Trump to the Quad Leadership Summit during his Washington visit. This security alliance, comprising the US, India, Japan, and Australia, is viewed as an important counterweight to China’s increasing regional influence.
Discussion on Global Issues
Modi and Vance also addressed regional and global developments, advocating for “dialogue and diplomacy as the way forward,” a phrase frequently used by New Delhi regarding the Ukraine-Russia conflict.
Personal Dimension of Vance’s Visit
Beyond the official agenda, Vance’s visit incorporates a personal aspect. The family traveled to Jaipur to tour royal palaces and visit the iconic Taj Mahal. Officials noted the “private component” reflects Usha Vance’s Indian heritage and the family’s connection to India.
Cultural Engagement
The Vance children wore traditional Indian attire on their first day, as the family explored the Swaminarayan Akshardham Hindu temple and shopped for local crafts. Modi gifted the children peacock feathers, the national bird of India.