On February 25, 2025, there were reports that the United States had imposed sanctions on four Indian companies for their role in Iran's petroleum and petrochemical industry, especially for facilitating the transportation of Iranian oil products in violation American laws.
According to a media report, the four sanctioned companies are Austinship Management Pvt Ltd., BSM Marine LLP, Cosmos Lines Inc, and Flux Maritime LLP.[1] The U.S. State Department has already designated eight other entities based in India, Iran, Malaysia, the Seychelles, and the UAE "for their alleged involvement in the trade of Iranian oil."[2]
Donald Trump and Narendra Modi met on February 13, 2025 (image courtesy:AlJazeera.com)
Indian policymakers are closely watching with concern these and other reports emerging from Washington after the February 13 meeting between U.S. President Donald Trump and Indian Prime Minister Narendra Modi. The concerns involve Trump's threat to use reciprocal tariffs against many countries, including China and India. The U.S. president has not only accused India of being "one of the highest-tariff nations in the world" but has also questioned USAID for spending $18 million for voter turnout in India.[3]
However, the main concern about U.S.-India relations involves the tariffs and whether Trump's policy of reciprocal tariffing will impact India's exports, though defense and other bilateral ties appear not to be affected. Examining India's concerns, Hindi-language daily Dainik Jagran recently published a report on U.S.-India trade dynamics, while Hindustan, another Hindi daily, published an article by journalist Alok Joshi assessing what he called the "new burden of American expectations on India." Excerpts from both are given below.
Following are excerpts from the Dainik Jagran report:[4]
"According To The SBI Report, Even If The U.S. Imposes High Tariff Rates Of 15-20 Percent, The Overall Impact On Indian Exports Will Be Limited To Just 3-3.5 Percent"
"Reciprocal Tariff: No Need To Fear Trump's Reciprocal Tariff, India Will Be Affected Only Minimally
"Ever since U.S. President Donald Trump announced the imposition of a reciprocal tariff, there has been constant discussion about its impact on India. Its effect has also been visible in the Indian stock market, which has been experiencing a continuous decline over the past several trading sessions [since October 2024].
"However, according to a report by the State Bank of India (SBI), the U.S. tariff reciprocity policy will have a very minimal impact on Indian exports, even though concerns regarding trade restrictions persist.
"Why Will There Be Minimal Impact On Indian Exports?
"According to the SBI report, even if the U.S. imposes high tariff rates of 15-20 percent, the overall impact on Indian exports will be limited to just 3-3.5 percent. The report states, 'The U.S. reciprocal tariff will not have a significant impact on India's exports. Even with a 15-20 percent increase in U.S. tariffs, the effect will remain only around 3-3.5 percent, which can be easily balanced through higher export goals.'
"According to the report, India can balance this impact through export diversification, value addition, and the exploration of new trade routes."
"India Is Now Formulating A Strategy To Reduce Its Dependence On A Single Market [i.e., the U.S.] – This Will Help Mitigate Risks In Situations Like Tariff Hikes Or Trade Wars"
"India's Largest Trade Partner Is The United States
"The United States remains India's top export destination. In the fiscal year 2023-24, the U.S. market accounted for 17.7 percent of India's total exports. However, India is now formulating a strategy to reduce its dependence on a single market. This will help mitigate risks in situations like tariff hikes or trade wars.
"India is actively working to strengthen trade relations with Europe, the Middle East, and other regions. To achieve this, supply chain networks are being developed to ensure stability in exports.
"Tariff Rates Between India And The U.S.
"According to the SBI report, the U.S. has not made significant changes to tariff rates on Indian products in recent years. However, India has increased tariffs on American products during this period.
"Tariff Rates on Indian Products by the U.S.:
"2018: 2.72 percent
"2021: 3.91 percent
"2022: 3.83 percent (slight decrease)
"Tariff Rates on American Products by India:
"2018: 11.59 percent
"2022: 15.30 percent (sharp increase)
"There are several reasons behind India's decision to raise tariffs on U.S. products. India is pursuing an assertive trade policy focused on maintaining trade balance and protecting domestic industries.
"Additionally, India is shifting its focus from exporting raw materials to exporting processed and high-value products. This strategy will not only boost export earnings but also ensure that Indian products remain competitive in the global market."
Following are excerpts from Alok Joshi's article:[5]
"Donald Trump Said That When It Comes To Bargaining Or Negotiation, Modi Surpasses Him – You Can Take This Statement Seriously, Or You Can Consider It As Something A Shopkeeper Says To A Customer After A Deal"
"The New Burden Of American Expectations On India
"[...] After meeting Prime Minister Narendra Modi, U.S. President Donald Trump said that when it comes to bargaining or negotiation, Modi surpasses him. You can take this statement seriously, or you can consider it as something a shopkeeper says to a customer after a deal. The truth is that apart from the balance of power, international politics now simply means bargaining, transactions, and looking out for one's own traders. Taking care of traders means thinking about the jobs and earnings of thousands or millions of people connected with them, as well as worrying about the health of one's own economy.
"Earlier, on such visits, a large entourage of industrialists and businessmen used to accompany heads of state or prime ministers. Over the past 30 to 40 years, whenever a U.S. president visited India, the owners and executives of major American companies were part of the delegation. During those two or three days, Indian organizations like FICCI [Federation of Indian Chambers of Commerce and Industry] and CII [Confederation of Indian Industry] would become very busy, facilitating deals for their members. Leaders would make grand statements in front of the public, but behind the scenes, their officials would calculate how many deals were struck and what the profit and loss of the visit amounted to.
"But now, the picture has changed – especially during Trump's era. Now, he openly advocates for his companies without hesitation. Interestingly, while Trump chants the slogan 'Make America Great Again,' on the other hand, Prime Minister Modi, standing on American soil, proclaimed, 'Make India Great Again.' At a surface level, they appear to be standing face-to-face, but can't both America and India be great at the same time?
"The truth is that even before taking office, Trump had tied himself to the issue of tariffs or customs duties, and now that issue is continuously growing. His latest announcement is about reciprocal tariffs – meaning, whatever a country does to the U.S., the U.S. will do the same to that country. In other words, the duty a country imposes on imports from America will have to be matched by the same duty on its exports to the U.S. But there's another side to this as well.
"Those who remember pre-liberalization India know how expensive and rare foreign goods used to be. Even today, as soon as customs duty on any item increases, its buyers start to worry. Now, if everyday goods face heavy duty burdens, what will happen? The straightforward answer is that inflation will rise. For developing countries like India, inflation is a concern, but in developed countries like the U.S. and Europe, inflation is almost a disaster because people there aren't accustomed to it."
"Indian Companies Engaged In Defense Production Might Find A Market In The U.S. As Well. The U.S. Has Made It Clear That It Now Wants To Increase Its Exports Of Oil And Gas. This Is India's Biggest Need"
"The announcement of a tit-for-tat tariff has created a stir in India. Some experts have even done the math and pointed out that India could suffer the most from this. This is a worrying matter because, in international trade, the U.S. is India's largest partner. The biggest share of India's total exports goes to the U.S., but from America's perspective, India ranks tenth on its list of customers. Clearly, Trump wants to change this situation. After all, right now, India is the world's largest market, as penetrating the Chinese market is extremely difficult for the rest of the world.
"After meeting Trump, Prime Minister Modi also stated that the goal is to increase India-U.S. trade to $500 billion by 2030. Trump's concern is why India sells so much to the U.S. but does not buy as much in return. He wants to balance the trade deficit between the two countries. Trump wants the trade between the two nations to involve roughly equal amounts of exchange. Now, if both countries aim to increase bilateral trade, it is clear that each will look out for its own interests.
A screenshot of Alok Joshi's article
"Artificial Intelligence (AI) is the biggest resource of the future and perhaps the greatest weapon as well. Both countries have agreed to work together on this. This could open the door to major changes in the future. In terms of arms, fighter aircraft purchases, and combat capabilities, India needs substantial support from the U.S., and those pathways seem to be opening. A ten-year 'framework' for defense cooperation is promised to be signed this year, along with talks about exploring two-way purchasing possibilities in defense procurement.
"It is significant that Indian companies engaged in defense production might find a market in the U.S. as well. The U.S. has made it clear that it now wants to increase its exports of oil and gas. This is India's biggest need, and the U.S. cannot sell it at a price much higher than the rest of the market. So, increasing trade benefits both countries, and the cost of higher duties will ultimately be borne by the people of both nations. Trump is using tariffs as a bargaining weapon. For now, he's shown his stance.
"At the Prime Minister's invitation, he is expected to visit India sometime soon. By then, much on the ground will have changed, and both sides will have prepared. We should hope that he brings some good news – similar to how India lowered duties before this visit as a gesture of goodwill. Trump himself is a businessman, and he understands that equal trade between countries like India and the U.S. might not be possible in today's conditions. However, fair treatment certainly can be — and both countries should hold that expectation."
