Unpacking the US-India 'Mega Partnership': Oil, Tariffs and Military Deals

Prime Minister Narendra Modi’s recent two-day visit to the US has culminated in a proclaimed ‘mega partnership’ with President Donald Trump, where both leaders agreed on significant deals, including increased imports of American oil and gas by India. This meeting comes amidst Trump’s push for reciprocal tariffs on all US trading partners, including India, which has been criticized for being one of the highest in the world.

During a joint news conference, Modi expressed openness to reducing tariffs on US goods and increasing military purchases from the US, specifically mentioning fighter jets. He humorously rephrased Trump’s campaign slogan, suggesting, ‘Make India Great Again’ (MIGA), to emphasize cooperation, termed ‘Mega partnership for prosperity’. Trump highlighted India’s known need for oil and gas, encouraging the new energy deal as a solution to diminishing the trade deficit.

Experts point out that while the US is India’s largest export market, the challenge for India remains in managing its own trade balance, especially since US oil may come at higher costs due to a stronger dollar. In addition to trade, immigration was another key area of discussion, with Trump announcing the extradition of a suspect from the 2008 Mumbai attacks to India, while Modi committed to facilitating the return of undocumented Indian nationals currently in the US.

The backdrop of these negotiations is Trump’s broader plan to impose tariffs on importing countries, asserting that many allies impose unfair trade practices on the US. He highlighted US tariffs averaging 5% on agricultural imports compared to India’s looming 39% tariff. Modi’s visit reflects significant efforts to possibly mitigate these trade barriers while solidifying military and energy ties. However, analysts are cautious about the implications of possible future tariffs and the ongoing scrutiny on immigration policies affecting Indian nationals in the US.