By Ritu Jha-
Prime Minister Narendra Modi’s first visit to Washington after Donald Trump began his second term in the White House was a subdued, business-first affair. While India and the U.S. agreed to negotiate a bilateral trade deal expected to reach $500 billion by 2030, Trump also highlighted increased defense sales to India, including F-35 jets, and oil and gas exports to narrow the trade deficit between the two nations.
Karl Mehta, chairman emeritus of the Quad Investors Network, spoke to indica about expectations from the high-level meetings between “friends” Trump and Modi.
“The good thing is that the president alluded to a trade agreement because he spoke about a goal to have a trade agreement. So, they’re going to work on it. That means there’ll be negotiations against whatever reciprocity they are asking for in each trade category. It’s going to be tough for India; it will not be an easy negotiation,” Mehta said. “The downside of the Modi-Trump meeting is that there were no specifics given. It was a more high-level meeting.”
Asked whether Modi appeared somber and more conscious than usual during his meeting with Trump, Mehta, who was in Washington, D.C., said, “He was very calm, it was obvious. I think President Trump pressed some hard buttons on trade in his usual style.”
Mehta called Trump a strong negotiator who was direct in criticizing India for its high tariffs. He pointed out that Trump specifically cited car tariffs, making it difficult for American automakers to sell vehicles in India.
According to the White House fact sheet released Feb. 13, the U.S. average applied Most Favored Nation (MFN) tariff on agricultural goods is 5%, while India’s average applied MFN tariff is 39%. India also charges a 100% tariff on U.S. motorcycles, while the U.S. levies only a 2.4% tariff on Indian motorcycles.
“On trade, I think being very open and directly criticizing India for its tariff and asking for reciprocity may have put Prime Minister Modi under pressure,” Mehta said. “And I think that was visible on his face. There were no specifics negotiated by the time of this meeting, so they had nothing to announce. But the upshot is that the president alluded to a trade agreement that will be negotiated over time.”
Trump remains adamant about reducing the trade deficit with India, Mehta said, adding that increasing oil, gas, and defense sales should help balance trade between the two nations.
“If India starts importing and reduces trade barriers, and if the U.S. starts exporting without any trade barriers on items like F-35 jets and other advanced military equipment, then the trade deficit will almost become zero,” Mehta said.
Addressing the $500 billion bilateral trade target announced by Modi during the joint press conference at the White House, Mehta called it ambitious.
“Right now, bilateral trade is approximately $150 billion. So it’s almost going 3x or 3.5x in five years. That’s a pretty ambitious target,” he said. “But it is possible and doable because currently, India is the 10th largest trading partner of the United States. Given the size of its economy, India has a lot to offer, and the U.S. has a lot to offer to India.”
Mehta emphasized that India must diversify its defense and energy imports and reduce reliance on Russia.
“This is the right time for Modi and India to take advantage of bilateral relations with the U.S. It will be foolish for India to miss this opportunity,” he said. “President Trump has offered full support and cooperation for advanced defense equipment. Not old tech and old equipment that India is buying from Russia. India will get the F-35s that the president mentioned. India should take full advantage of that and upgrade its air force and military equipment.”
Mehta also noted that Modi announced regulatory changes related to a nuclear agreement. A 2008 civilian nuclear agreement between the U.S. and India has not taken off commercially due to India’s liability policy, which places liability on the vendor in the event of a nuclear accident.
“No American company would want to take that liability. There is no insurance available to cover that liability,” Mehta said. “Now India seems to be working on revising that policy. If they do, there will be significant investments and new technology available for small modular reactors.”
On the Quadrilateral Security Dialogue (Quad), a strategic alliance among the U.S., India, Japan, and Australia, Mehta expressed optimism.
“Trump said very positive things about Quad. He even said that during his first term, he reinvigorated the Quad, which had gone dormant,” Mehta said. “He’s looking forward to a Quad summit that India is expected to host this year, likely in April, when President Trump is expected to travel to India.”
Quad focuses on maritime security, health partnerships, and emerging technology collaboration but does not currently address trade barriers, which are handled bilaterally, he said.
On the military front, Mehta noted continued joint exercises among the Quad nations in the South China Sea and Indian Ocean, which he said bolster security in the Indo-Pacific region.
Regarding reciprocal tariffs, Mehta said the textile and auto component industries might be the hardest hit. “India has a pretty good export market in the United States on textiles, gems and jewelry, and auto components. What is not clear yet is services, as India’s trade surplus with the U.S. is largely due to IT services,” he said. “That will be a big part of the ongoing negotiations.”
