India’s Trade Gamble with the United States: Reform or Retreat?

The announcement by Commerce Minister Piyush Goyal that India and the United States will issue a joint statement on a trade deal within four to five days, followed by a formal agreement in March, has been hailed by the government as a landmark achievement. The reduction of US tariffs to 18 percent through a White House executive order is being projected as a breakthrough that will boost Indian exports, particularly in labour-intensive sectors. Yet beneath the celebratory tone lies a complex web of concessions, strategic compromises, and unanswered questions that cast doubt on whether India is truly gaining or quietly losing ground in this deal.  

The government’s narrative is clear: lower tariffs will mean more exports, more jobs, and greater global confidence in India’s economic trajectory. Prime Minister Modi himself has spoken of India as a “ray of hope” for the world, and the Ministry of External Affairs has stressed that the revised tariff rates will benefit Indian workers. But opposition leaders and independent experts argue that the deal is less about India’s gains and more about Washington’s leverage. The assertion by President Trump that India will buy goods worth $500 billion from the US over the next five years is not a minor detail—it is the heart of the matter. Aircraft orders alone are expected to reach $70–80 billion, while energy imports and semiconductor purchases will form the bulk of the remaining commitments. In effect, India is binding itself to a procurement trajectory that could reach $2 trillion in five years, with the US cornering a quarter of that market.  

Critics point out that this is not a balanced trade agreement but a managed trade arrangement tilted heavily in favour of the United States. India’s annual import requirement of $300 billion is being positioned as an opportunity for US suppliers, but this raises the question: what happens to India’s traditional partners, including Russia, the Middle East, and Latin America? The MEA spokesperson Randhir Jaiswal attempted to clarify that India’s energy decisions are guided by national priorities, not external pressure, but the ambiguity surrounding Russian oil imports is telling. Trump’s claim that India has agreed to stop buying Russian oil was neither confirmed nor denied. Instead, the government emphasized diversification and affordability. This hedging suggests that India is under pressure to align its energy sourcing with Washington’s geopolitical agenda, even if it undermines the principle of strategic autonomy.  

The Leader of the Opposition has already raised concerns that India is being cornered into a dependency trap. By committing to massive purchases from the US, India risks losing bargaining power in global markets. The promise of tariff reductions may boost exports in textiles, leather, and other labour-intensive sectors, but the scale of imports from the US could easily outweigh these gains. A simple calculation illustrates the imbalance: if India exports an additional $50–60 billion annually due to lower tariffs, but imports $100 billion or more in aircraft, energy, and chips, the trade deficit will widen. This is not reform—it is retreat disguised as progress.  

Economists have warned that the government’s projection of benefits is overly optimistic. The reduction of tariffs to 18 percent is significant, but it does not automatically guarantee market access. US regulatory barriers, anti-dumping duties, and non-tariff measures have historically restricted Indian exports in sectors like pharmaceuticals and IT services. Without addressing these structural issues, tariff reductions may remain symbolic. Moreover, the government’s claim that labour-intensive sectors will benefit ignores the fact that automation and supply chain restructuring in the US could limit demand for Indian goods.  

Defence analysts have also expressed unease. The deal’s emphasis on aircraft procurement raises questions about whether India is prioritizing US suppliers over indigenous production. With Make in India and Atmanirbhar Bharat being touted as flagship initiatives, committing tens of billions to foreign aircraft purchases undermines the very idea of self-reliance. The opposition has seized on this contradiction, accusing the government of sacrificing domestic industry for the sake of political optics.  

The financial dimension is equally troubling. Reports of unaccounted public funds amounting to ₹34 lakh crore have already cast a shadow on the government’s credibility. Entering into a massive procurement deal with the US without transparent accounting mechanisms only deepens the suspicion that India is being locked into obligations it cannot afford. Experts argue that the government should have prioritized strengthening domestic capacity in energy and technology rather than committing to large-scale imports. The semiconductor sector, for instance, could have been developed through joint ventures and indigenous investment, but instead India is positioning itself as a buyer rather than a producer.  

Social activists have highlighted another dimension: the impact on ordinary citizens. Rising energy imports from the US and Venezuela may secure supplies, but they are unlikely to reduce costs for consumers. In fact, dependence on US energy could expose India to price volatility and geopolitical risks. The government’s insistence that energy security for 1.4 billion Indians is paramount rings hollow when the strategy is built on external dependence rather than internal resilience.  

Political commentators like Dr. Satish Misra have described the government’s approach as “theatrics of reform.” By projecting the deal as a triumph, Modi and Goyal are attempting to shift attention away from domestic failures—rising crimes against women in BJP states, religious commercialization in Uttarakhand, and the lack of accountability in defence procurement. The trade deal becomes a narrative tool, a way to claim global success while evading domestic scrutiny.  

The opposition’s critique is sharp: India is not negotiating from a position of strength but from a position of vulnerability. The promise of tariff reductions is being used to mask the reality of massive import commitments. The government’s refusal to clarify its stance on Russian oil is symptomatic of a larger problem—the erosion of strategic autonomy. By aligning too closely with Washington, India risks alienating traditional partners and compromising its ability to pursue an independent foreign policy.  

In the end, the India-US trade deal is less about economics and more about politics. It is about projecting India as a global player while quietly conceding ground to American interests. The government’s narrative of reform, perform, transform may resonate in speeches, but the numbers tell a different story. Imports worth $500 billion, exports gains of perhaps $60 billion, widening deficits, compromised autonomy, and weakened domestic industry—this is not the path to Viksit Bharat but a detour into dependency.  

The joint statement may be issued in a few days, and the formal agreement may be signed in March, but the real question is whether India is signing away its leverage for the sake of optics. The opposition believes so, and experts across sectors echo the concern. Modi’s government may celebrate the deal as a victory, but history may judge it as a costly compromise.