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HARISH MANAV
Thenewsdose.com
New Delhi/Chandigarh, Aug 1, 2025,UPDATED:7.45 PM
Responding to the recent 25% tariff hike and penalties imposed by the U.S., the Ministry of External Affairs (MEA) on Friday emphasised that India–U.S. relations have withstood multiple transitions and challenges in the past and remain on a forward trajectory. MEA spokesperson Randhir Jaiswal, addressing the weekly media briefing, said: “We remain focused on the substantive agenda that our two countries have committed to and are confident that the relationship will continue to move forward.”
India and the U.S., he said, share a comprehensive global strategic partnership rooted in shared democratic values, economic interests and deep people-to-people ties. “This partnership has weathered several transitions and challenges, and it will continue to grow,” he added.
When explicitly asked about penalties linked to India’s purchase of Russian oil and weapons, Jaiswal downplayed the impact, asserting: “Our bilateral relationships with various countries stand on their merit and should not be seen from the prism of a third country. Energy sourcing and defence acquisitions are guided solely by our national security imperatives.”
Defence Ties Unaffected
On the issue of India–U.S. defence ties, Jaiswal stressed that the partnership is robust and expanding: “We have a strong defence partnership with the U.S., which has been strengthening over the last several years. There is potential for further growth under the India–U.S. ‘COMPACT’ arrangement for the 21st century.”
India is already a Major Defence Partner of the U.S., with joint projects ranging from jet engine co-production to advanced maritime surveillance platforms. Officials indicate that defence co-development and co-production under initiatives like ICET (Initiative on Critical and Emerging Technologies) are unlikely to be affected by tariff frictions.
Implications of the Tariff Hike and Penalties
1. Trade & Economic Impact
The 25% tariff hike by Washington, reminiscent of former U.S. President Donald Trump’s protectionist trade policy, primarily targets strategic imports, including energy and defence-linked products. While India’s direct exposure to these tariffs is limited in absolute terms (as oil imports from Russia and certain defence procurements are outside the standard tariff structure), secondary effects could emerge:
- Higher supply chain costs for sectors dependent on U.S. intermediate goods.
- Potential retaliatory measures from India, as seen during earlier U.S.–India tariff disputes on steel, aluminium and agricultural commodities.
- Possible reworking of procurement channels for dual-use goods and critical technologies.
2. Geopolitical Balancing
The penalties linked to India–Russia ties highlight Washington’s discomfort with New Delhi’s continued reliance on Russian energy and weapons. However, India’s position is firmly non-aligned, and MEA’s stance makes it clear that New Delhi will not allow its sovereign choices to be dictated by external pressure.
- India’s oil imports from Russia have surged post-Ukraine war, given price discounts and long-term energy security considerations.
- Defence procurement, especially legacy platforms like the S-400 air defence system, continues despite U.S. CAATSA (Countering America’s Adversaries Through Sanctions Act) provisions.
3. Strategic Partnership Outlook
Despite tariff tensions, the India–U.S. partnership has strategic depth that goes beyond transactional trade disputes:
- Quad cooperation (India–U.S.–Japan–Australia) in the Indo-Pacific.
- Joint development of emerging technologies under iCET.
- Expanding defence logistics and joint exercises such as Yudh Abhyas and Malabar.
Experts suggest that short-term tariff measures are unlikely to derail long-term strategic convergence, especially given common concerns about China’s rise and the need for resilient supply chains.
Bottom Line
While the tariff hike and penalties add a layer of friction to the economic relationship, New Delhi’s calibrated response signals its intent to de-escalate trade tensions while preserving its strategic autonomy in defence and energy sourcing. The India–U.S. partnership—built on converging security interests and expanding technology cooperation—is expected to remain on a growth trajectory despite episodic challenges.
India–U.S. Trade & Defence Snapshot
- Bilateral Trade (2025 Estimates)
- Total Trade Volume: ~$190 billion (goods + services)
- India’s Exports to U.S.: $120 billion (mainly textiles, pharmaceuticals, IT services, jewellery)
- India’s Imports from U.S.: $70 billion (mainly aircraft, crude oil, LNG, electronics, defence equipment)
- Key Note: The U.S. is India’s largest trading partner, surpassing China in 2023.
- U.S. Tariff Structure Impact
- New Tariff: 25% hike applied on specific imports linked to strategic commodities.
- Affected Sectors: Industrial machinery, select defence-grade components, and technology hardware.
- India’s Direct Exposure: Limited, but indirect costs via supply chain dependencies could rise 5–7%.
- Defence & Strategic Ties
- Major Defence Partner Status: Granted in 2016; allows high-tech defence transfers.
- Big Ticket Deals:
- MH-60R Seahawk helicopters ($2.6 billion)
- GE–HAL jet engine co-production agreement (2023)
- Predator MQ-9B drones ($3 billion)
- Annual Exercises: Malabar (naval), Yudh Abhyas (army), Cope India (air force).
- iCET (Initiative on Critical & Emerging Technologies): Focus on semiconductors, AI, quantum, 5G/6G.
- Russia Factor
- Russian Oil Imports: Up 12x since 2022, making Russia India’s largest oil supplier.
- Defence Dependency: ~60% of India’s inventory is Russian-origin (Sukhoi fighters, T-90 tanks, S-400 systems).
- S. Position: Opposes Russian defence transactions (CAATSA) but has so far granted India waivers due to strategic convergence in the Indo-Pacific.
Quick Takeaway
Even with tariff frictions, structural drivers (security, technology, diaspora links) make the India–U.S. relationship resilient. India is unlikely to reduce its energy and defence reliance on Russia abruptly. Still, Washington also values New Delhi’s balancing role vis-à-vis China, limiting the risk of long-term confrontation.
