US Vice President JD Vance began a four-day visit to India on April 21.

He is scheduled to meet with Prime Minister Narendra Modi to discuss trade and defense partnerships.

The visit comes as India works to finalize a trade deal with the US, following a temporary pause on tariff hikes announced by President Donald Trump earlier this month.

Vance and Modi will review progress on agreements made during Modi’s February meeting with Trump, including trade fairness and defense cooperation.

Two-way trade between India and the US reached US$129 billion in 2024, with India enjoying a US$45.7 billion surplus. India is reportedly open to reducing tariffs on over half of its US imports, valued at US$41.8 billion.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ India’s evolving trade leverage gives it unique negotiating power

India has steadily strengthened its position in trade negotiations with the US through a relationship that has matured significantly over decades, making it less vulnerable to tariff threats than other nations.

While trade between the countries has grown dramatically from $19 billion in 2000 to over $131.84 billion in 2024-25, India’s consumer-led economy provides unusual leverage as exports account for only about 20% of its GDP 1.

The US has been India’s largest trading partner for four consecutive years, but India maintains a significant trade surplus ($41.18 billion in 2024-25) that has grown from $35.32 billion the previous year 2.

This trade structure differs fundamentally from US-China relations, as India’s exports are more diversified with the US accounting for only 18% of shipments, and services form a significant portion of the relationship 1.

Under Trump’s proposed tariff scheme, Indian exports would face a lower 26% duty compared to higher rates for countries like Vietnam and Thailand, potentially creating a competitive advantage 3.

The current negotiations reflect a pattern established in previous administrations, as Trump and Modi previously discussed trade facilitation during their 2014 summit, highlighting the ongoing importance of addressing trade imbalances 4.

2️⃣ Tariff conflicts reveal the need for deeper structural agreements

The current trade tensions between the US and India aren’t new but represent an ongoing pattern of cooperation mixed with periodic disputes that reveal the need for more comprehensive agreements.