Date: August 21, 2025

Prepared for: U.S. Leadership and National Security Council

Background

U.S.-India relations face serious strain due to escalating trade tariffs (set to reach 50% on August 27, 2025).

China continues to expand its power across the Indo-Pacific and deepen ties with Russia, posing the primary long-term strategic threat to the U.S.

India, the world’s fastest-growing major economy and a rising security actor, stands as the only Asian power capable of acting as a counterweight to China.

A rupture with India risks undermining 25 years of bipartisan momentum in building the partnership.

Key Strategic Imperatives

China Counterbalance

Unlike Communist China, India’s rise does not threaten democratic order.

Growing Indian power constrains Chinese global ambitions.

U.S.-India alignment is essential for maintaining a free and open Indo-Pacific.

Supply Chain Security

India can manufacture at China-like scale in critical industries (textiles, solar, consumer electronics).

Strategic U.S.-India economic cooperation is necessary to diversify global supply chains away from Beijing.

Defence & Regional Stability

India’s growing military capabilities and its increasing role in the Middle East can help stabilize the region as the U.S. reduces its footprint.

Indian geography allows it to exert direct pressure on China’s key energy and trade routes.

Shared Security Threats with China

Border skirmishes such as Galwan (2020) show India’s direct confrontation with Chinese aggression.

Supporting India militarily and economically bolsters a frontline partner.

Russian Oil Issue

U.S. criticism of India’s Russian oil purchases appears inconsistent when China, a far larger buyer, faces no consequences.

Addressing this disparity is critical to prevent mistrust and strategically push India closer to the U.S., not away.

Policy Recommendations

Reverse Trade Escalation

Pause or roll back the additional 25% tariff against India.

Launch a structured bilateral trade dialogue to resolve disputes without resorting to punitive escalation.

High-Level Engagement

President Trump should initiate direct talks with PM Modi immediately (“the sooner the better”).

Elevate India partnership to the same strategic tier as U.S. engagement with Israel or China.

Strategic Resource Allocation

Increase joint defence projects, intelligence-sharing, and Indo-Pacific naval cooperation with India.

Support India’s defence modernization to help it deter and counterbalance China.

Economic Partnership Expansion

Facilitate U.S. private sector investment in India’s manufacturing and renewable energy sectors.

Establish joint U.S.-India supply chain consortiums in areas like semiconductors, pharmaceuticals, and green tech.

Balanced Approach on Russian Oil

Work with India on a transitional energy strategy that recognizes New Delhi’s legitimate economic and security concerns.

Avoid punitive measures that push India toward Moscow or Beijing.

Conclusion

The U.S.-India relationship is not a secondary issue—it is a frontline strategic necessity. Allowing current trade disputes to escalate into a lasting rupture would be a preventable strategic disaster, undermining America’s ability to counter China in Asia. By immediately reversing tariff escalation, investing in high-level diplomacy, and prioritizing joint economic and security initiatives, the U.S. can stabilise and elevate the partnership with India to serve long-term national interests.

Draft Joint Statement

By: The President of the United States, Donald J. Trump, and the Prime Minister of India, Narendra Modi

Date: August 2025

The President of the United States, Donald J. Trump, and the Prime Minister of India, Narendra Modi, spoke today to reaffirm the strength of the U.S.-India strategic partnership and to chart a forward-looking path for cooperation on key economic and security priorities.

Both leaders emphasised that the relationship between the United States and India is built on shared democratic values, mutual trust, and a common vision for a free, open, and inclusive Indo-Pacific. They agreed that deepening this partnership is critical to ensuring global peace, prosperity, and security.

On trade and economic engagement, President Trump and Prime Minister Modi directed their teams to resolve outstanding issues in a constructive and timely manner. They emphasized the importance of strengthening bilateral trade and investment ties, while also enhancing global supply chain resilience. Both leaders acknowledged India’s significant role in supporting diverse and reliable supply chains as the world’s fastest-growing major economy.

On security and defence, the leaders underscored the importance of expanding cooperation, including in defence production, maritime security, and counterterrorism. They reaffirmed their shared commitment to safeguarding regional stability, particularly in the Indo-Pacific, and agreed to deepen joint work between their armed forces and defence industries.

The two leaders also discussed energy security, including India’s energy needs, and agreed to explore collaborative pathways that reduce global dependence on adversarial sources while promoting affordable and sustainable alternatives.

President Trump and Prime Minister Modi reaffirmed that differences should not overshadow the remarkable progress made in the relationship over the last 25 years. They committed to maintaining regular high-level engagement and to building on the strong foundation of U.S.-India cooperation for the future.

Both leaders concluded by underscoring that the U.S.-India partnership will remain an indispensable force for global stability and prosperity in the 21st century.

IDN Report