Trade, Tariffs, and Visas to be Key Focus of Trump-Modi Discussions

HIGHLIGHTS:

• Modi and Trump will focus on strengthening the US-India relationship, with discussions on trade, tariffs, and countering China.
• Modi may seek investment in India's nuclear energy sector while addressing oil imports, balancing renewable and nuclear energy goals.
• iCET, a key tech initiative, will be central, with Modi likely pushing for the continuation of the H-1B visa program and further tech cooperation.

When Indian Prime Minister Narendra Modi meets President Donald Trump in Washington later this week, their encounter will include friendly embraces and shared moments of laughter, but it will go beyond that.

Over time, Trump has built a warm and close rapport with Modi, as evident from the most significant meetings and public engagements that have highlighted this relationship. Besides the first direct meeting in Washington in 2017, their relationship has progressed on through various events that include making joint appearances such as in large rallies that took place in places like Houston and Ahmedabad. The robust bond is also explained in terms of closely knit worldviews and political props and common emphasis on countering China which further enriched the wider US-India partnership.

Not surprisingly, while Trump criticized India most of the time, he never made similar criticisms of Modi.

During Modi's US visit, the two leaders are expected to deliberate on outlining the next steps of the already strong US-India strategic partnership.

Modi is expected to meet several members of Trump's cabinet, apart from his interaction with US business leaders and the Indian-American community. He may also have a meeting with Elon Musk, the chief executive officer of SpaceX and Tesla. This would be welcome to Modi since it relates to his interest in increasing India's growing electric vehicle industry, which he would like to see innovative developments, including a Tesla factory in India.

However, beneath the warm Trump-Modi camaraderie and lofty discussions of their strategic partnership lies a more practical reality: during Modi's visit, the transactional nature of their relationship will become evident, with each leader, particularly Trump, presenting a list of demands.

Delhi is well-acquainted with Trump. Many of Modi's current cabinet ministers also served during his previous term, which overlapped with part of Trump's first administration. This familiarity has been apparent since Trump's inauguration last month, with Delhi openly signaling its readiness to reduce tariffs, repatriate undocumented Indian immigrants, and purchase more American oil.

India has already reduced some tariffs and repatriated 104 undocumented Indians, with the first flight arriving last week. These proactive measures are designed to head off specific demands from Trump and minimize the risk of tensions with his new administration.

Nonetheless, Trump may still push Modi to make further tariff cuts to help address the US trade deficit with India, which has reached nearly $46bn (£37.10bn) in recent years. 

However, what might appear as a challenge could also present an opportunity: Modi could propose that Trump engage in bilateral talks to establish an economic partnership agreement aimed at reducing tariffs on both sides.

In recent years, India has become increasingly open to pursuing trade deals, and the Trump administration may be a more receptive partner compared to the Biden administration, which imposed strict environmental and labor-related conditions on new trade agreements.

Trump may also urge Modi to accept the return of more undocumented Indians. With estimates suggesting the number exceeds 700,000 – the third-largest group of its kind in the US – this will present a challenging and sensitive issue for Delhi to address.

Last week, India's Foreign Minister S. Jaishankar informed parliament that the government is collaborating with the US to ensure that Indian citizens are treated fairly during deportation, following reports of them being shackled, which caused public outrage.

Trump might also press Modi to purchase more American oil.

Modi may also bring up his own energy request: to encourage investment in India's nuclear energy sector. Delhi is revising its nuclear liability law and has launched a new nuclear energy mission to attract greater international interest in this energy source.

India plans to meet half of its energy needs through renewable sources by 2030. Asking Trump to invest in nuclear energy could strike a balance: it’s cleaner than fossil fuels, yet distinct from solar and wind power, which might not appeal to the Trump administration as a promising investment.

Technology is likely to be another topic of discussion.

Tech cooperation has become a rapidly growing area for bilateral relations during the Biden era, particularly with the 2022 launch of the Initiative on Critical and Emerging Technologies (iCET), which both nations see as a key foundation for their strategic partnership. iCET is designed to be directly overseen by the two national security advisers, bypassing bureaucratic hurdles, ensuring they are personally invested in its success.

Modi will likely seek reassurances from Trump and National Security Adviser Mike Waltz that they remain committed to this initiative. Given Washington's focus on countering China by integrating India more into global tech supply chains, they are likely to affirm their support.

On the tech cooperation front, Modi may also advocate for Trump to preserve the H-1B visa program. These visas, which have been granted to large numbers of Indian tech workers in the US, have faced criticism from some influential Trump supporters.