The Art of the Deal

THE RUSSIAN INVASION of Ukraine posed immediate challenges to India’s diplomacy, the foremost being extract­ing some 22,000 Indian students from the war-torn nation. Initial weeks were consumed in calling in favours and striking deals with irregular forces in conflict zones to ensure safe pas­sage to Poland, Romania, Slovenia, Moldova and Hungary. But as the implications of the war sunk in, it became evident that India had a tough act to perform, one that would test the resilience of its doctrine of strategic autonomy.

As the West led by the Biden administration doubled down on Russia, slamming it with sanctions and insisting everyone else follow suit, India avoided direct condemnation of Moscow in the United Nations. It did not endorse President Vladimir Putin’s violation of Ukrainian sovereignty, but did not hesitate to the purchase of Russian oil, essential to keep domestic energy prices stable and contain inflation.

The purchase of Russian oil intensified the Western blowback but as India refused to budge, the Biden admin­istration reluctantly agreed to look the other way. Despite the double standards at play—the European Union did not sanction Russian gas supply and received refined Russian crude from India—the Modi government had to negotiate a blizzard of criticism.

Then, in November 2025, a little less than three years since Putin declared war on Ukraine, Donald Trump returned to the White House on the back of a resounding victory. Trump swiftly established contact with Putin and the American and Russian delegations met in Riyadh to consider a likely peace. As Putin and Trump connected, India’s determination to retain its ties with Russia paid off—it was on the same page as the new US admin­istration. Prime Minister Narendra Modi’s call on Russia was, of course, not just about oil. Given the deepening proximity between Russia and China, it made little sense to prod Moscow more firmly into China’s embrace. The magnitude of the regime change in Washington was such that it upended equations and assump­tions across much of the world almost overnight.

Seizing on his previous interactions with Trump and fol­lowing intensive groundwork during External Affairs Minister S Jaishankar’s visit to the US for Trump’s inauguration, Modi was an early visitor to the White House. The prime minister’s Febru­ary 12-13 visit offered an opportunity of a quick re-connect and a first-hand assessment of Trump 2.0’s priorities. Experienced foreign policy analysts feel delaying the visit in the hope of getting a clearer picture of the new administration’s actions may not have served much purpose given a certain turbulence is inherent to Trump’s thinking.

As he took stock of India’s priorities, Modi understood the need to respond to issues that Trump has placed at the top of his to-do list. The prime minister was quick to unambiguously criti­cise illegal migration as a criminal enterprise and agreed to accept Indian citizens held without valid papers in the US. He also agreed to a negotiatory process on bilateral trade in response to Trump’s gripe that In­dia’s tariffs are a hurdle to American exports. This not only buys some time, but provides room to engage in give and take while reducing the possibility of unilateral actions that might prove hard to undo.

ON BOTH TRADE and geopolitics, there is a lot of hard thinking ahead for India. Mobility of Indian talent has been a key consideration in India’s trade negotiation. This acknowledges the desire of educated and skilled Indians to work in the West as also the requirement of Indian firms to send personnel abroad to service contracts. It is not a one-way street as American businesses profit from the skill, work ethic and cost savings offered by Indians. Yet, as the clash between the Make America Great Again (MAGA) sentiment and Trump’s Silicon Valley tech supporters indicates, the popular mood—includ­ing the more urbane classes—is wary of all migrants, including skilled Indians. So, the question of how much to invest in Mobil­ity Mode 4, the supply of services through the movement of in­dividuals, in discussions on trade and services becomes relevant. Or put another way, even if Mode 4 continues to be important for India, are there other avenues and commerce streams that can make the case more acceptable?

One way, feel some commentators, is to encourage and nur­ture the burgeoning global capacity centre (GCC) ecosystem in India. The complexity and scale of GCCs has increased rapidly in recent years and while this may not be the same as working for a multinational in the US, it is the best that might be available in India. The Union Budget’s proposal to devise a framework to enhance availability of talent and infrastructure, consider build­ing byelaw reforms, formulate mechanisms for collaboration with industry and expand GCCs to Tier 2 and 3 cities is a step in this direction.

Some reports estimate the reciprocal tariffs announced by the US may have limited impact on India, perhaps not more 3-3.5 per cent of Indian exports. The tariffs are a concern for steel and aluminium makers and while the pledge to increase bilateral trade to $500 billion offers scope for negotiation and policy convergence, a special dispensation for India is unlikely. The “background” briefings of US officials who have welcomed the Budget’s tariff signals but indicated more needs to be done suggest there may not be a carve out, or at least one on the lines Indian businesses might hope for. There is therefore a need to think afresh on tariff structures that goes beyond the desire to consider enhanced access to the US market, which while a le­gitimate quest, needs to be supplemented by measures at home.

Despite a clear advancement in the quality of India’s infra­structure, reduced red tape and efficiencies of digital payment systems, India is yet to take fullest ad­vantage of China Plus One strategies considered by international business­es. The Gujarat International Finance Tec-City (GIFT city) project located be­tween Gandhinagar and Ahmedabad with its Metro links, tax incentives and air and port connectivity is intended to incentivise foreign investment. The plan for a global finance and IT hub has evoked interest in many world capitals and is a way to drive American interest in trade and investment. India’s potential to increase its footprint as a trading nation has much to do with its ability to improve business opportunities, rationalise rules and laws and insulate economic policies from sudden changes.

Tariffs can be instruments of negotiation as is evident with Colombia’s decision to accept deportees in the face of the US threat to impose levies, which were then withdrawn. In more nuanced negotiations, tariffs can be used to achieve commercial and diplomatic objectives that do not require actual imposition of duties. As India begins negotiations for a bilateral trade agree­ment (BTA) to be concluded within an ambitious deadline be­fore the end of the year, it is reconsidering aspects of its industrial policies based on lessons learnt since the embrace of liberalism in 1991-92 is unavoidable. As the PV Narasimha Rao government signalled a major shift from the Licence Permit Raj and declared its willingness to court foreign investment, sections of Indian industry warned that domestic businesses will face unequal competition. Even today, in pre-Budget consultations, industry bodies routinely seek protection from imports and policy and tax concessions. While the government is committed to listen­ing to industry and Finance Minister Nirmala Sitharaman has repeatedly stated this, a graded reduction in import tariffs may need to become part of the government-industry consultations. This appears at odds with protectionist instincts across the world but is tied in with a question that foreign investors ask—if In­dia presents itself as an attractive investment destination, why is the pace of private investment sluggish? Private investment has indeed picked pace but there is little doubt that Central and state capital expenditure do the heavy lifting. This question does not relate to industry alone with the Economic Survey calling for a renewed commitment to reforms and a dedicated push for faster deregulation. Details of the scope and goals of the prime minister’s announcement that a deregulation commission is in the works are eagerly awaited.

With the debate over competitiveness of Indian industry and the country’s status as a trading nation central to trade talks with the US or any other major economy, there is a need to look beyond bilateral FTAs. As global trade patterns evolve, policymakers are considering if India can better leverage concerns it shares with other nations over China’s military and economic expansionism by being part of regional blocs despite Chinese presence in such arrangements. In November last year, government think tank NITI Aayog Chief Executive Officer BVR Subrahmanyam accept­ed that India could do more to benefit from the China Plus One impulse and said the decision to stay out of the Regional Compre­hensive Economic Partnership (RCEP) needs be revisited. India is moving on trade and economic agreements with Gulf nations and seeking agreements with the UK, the European Union and New Zealand. But the gain-loss calculus of being part of a larger trade agreement may require, feels a section of commentators, more thought.

Among the reasons why Trump was agreeable to host Modi early into his presidency was likely a desire to show a lead­ing member of the Global South is aligned to his thinking on important geopolitical matters. Though Modi’s public articula­tion is very different from Trump’s colourful phraseology, the two leaders share a personal equation and rightwing convictions on issues such as illegal migration and an instinctive rejection of left-Woke positions.

IN HIS FIRST term, Trump called out China’s military and economic muscle-flexing and the US national secu­rity policy unveiled in 2017 accused Beijing of trying to displace America from the Indo-Pacific, export its state-centric model and reorder the region in accordance to its interests. The document mentioned China no less than 23 times and the Biden administration was wary of appearing weak in dealing with the communist giant. No doubt the American effort to retain leadership in global affairs, the obvious read­ing of the MAGA slogan, will define its approach to China. On February 18, the State Department’s decision to “update” its page on the “Current State of US-Taiwan” relations by removing the sentence that the US “does not support Tai­wan independence” raised a storm in the South China Sea. China’s anger was palpable as its foreign ministry criticised the change. “This move severely violates the One-China prin­ciple and three China-US joint communiqués, goes against international law and basic norms of international relations and sends a seriously wrong signal to the separatist forces,” said the ministry. The 10 per cent additional tariffs the US has imposed on China is accompanied by the possibility of nego­tiations. The White House has pointedly reminded observers that Trump previously acted against China’s theft of intellec­tual property, forced technology transfer and “other unreason­able behaviour” to reach a historic economic agreement. On the other hand, while a Russia-US thaw may ease international tensions, it is unlikely to alter the Moscow-Beijing equation much. It might be useful for India to be prepared for reduced room to manoeuvre and keep a watchful eye on US-China ties.

The challenges of navigating a world order buffeted by major conflicts post-Covid required a nimble-footed response and India’s refusal to see partnerships as binary or zero-sum games served it well as it made a distinction between self-serving opportunism and strategic choices. Trump 2.0 is upending many aspects of existing US policy and accelerat­ing change. Rough weather is inevitable in uncertain times but India can play an outsized role in international affairs through astute negotiations and a political commitment to become a truly modern nation.

Bilateral talksdiplomacyDonald TrumpIndo-US relationsNarendar Modistrategic interest