The recent revelation by U.S. Commerce Secretary Howard Lutnick has cast a spotlight on the stalled India-U.S. bilateral trade negotiations, attributing the impasse directly to Prime Minister Narendra Modi's reluctance to place a personal call to U.S. President Donald Trump.

Speaking on a podcast on 8 January 2026, Lutnick disclosed that he had explicitly urged Modi to contact Trump to seal the deal, yet India appeared "uncomfortable" with this approach, leading to no such call materialising.

This development follows closely on the heels of Trump's own pointed remarks, where he expressed dissatisfaction with India's continued purchases of Russian oil amid ongoing geopolitical tensions. Trump hinted at the possibility of imposing new tariffs on New Delhi "very quickly," a statement that underscored the fragility of the trade talks at a critical juncture.

Negotiations between the two nations have already progressed through six rounds, focusing on a framework agreement to address the steep 50% tariffs imposed on Indian goods entering the American market. These tariffs have long been a bone of contention, hampering India's export competitiveness in sectors such as textiles, pharmaceuticals, and information technology hardware.

Lutnick's comments reveal a sense of frustration within the U.S. administration. He noted that deals with Indonesia, the Philippines, and Vietnam were finalised and announced ahead of schedule, partly under the assumption that the India pact would precede them. However, these alternative agreements were struck at higher tariff rates for the U.S., complicating matters further when India later signalled readiness to proceed.

In Lutnick's words, when India circled back indicating it was "ready," he responded sceptically: "Ready for what?" This exchange highlights a perceived mismatch in negotiation timelines and commitments, with the U.S. having moved forward without India, potentially locking in less favourable terms for future Indian engagement.

The backdrop to these talks is India's strategic balancing act in global energy markets. Despite Western sanctions on Russia following the Ukraine conflict, New Delhi has ramped up imports of discounted Russian crude to shield its economy from volatile prices. This pragmatic stance has irked Washington, which views it as undermining efforts to isolate Moscow economically.

Trump's tariff threat, articulated just days before Lutnick's podcast, aligns with his broader "America First" agenda, emphasising reciprocal trade practices and reduced deficits. The U.S. trade imbalance with India, standing at over $30 billion annually in Washington's favour for services but against it for goods, remains a persistent irritant.

For India, the prospective deal held significant promise. Resolving the 50% tariff barrier could unlock billions in exports, bolstering manufacturing under initiatives like Make in India and Atmanirbhar Bharat. Sectors such as gems and jewellery, automobiles, and engineering goods stand to gain immensely from tariff reductions.

Yet, the personal diplomacy angle introduced by Lutnick raises questions about the dynamics between Modi and Trump. Both leaders have historically enjoyed a rapport, evidenced by events like the "Howdy Modi" rally in 2019 and "Namaste Trump" in 2020. However, diverging priorities—India's non-aligned foreign policy versus U.S. pressure on Russia—appear to have strained this relationship.

India's embassy in Washington has reportedly intensified engagement with Trump aides, including firms involved in trade discussions, under what sources term "Operation Sindoor." This behind-the-scenes effort aims to salvage bilateral ties amid the trade deadlock and broader strategic cooperation.

The U.S. has swiftly concluded pacts with Southeast Asian nations, reflecting a pivot towards Indo-Pacific partners willing to align more closely on trade and security. Indonesia's deal, for instance, emphasises agricultural exports and digital trade, while Vietnam's focuses on electronics and textiles—areas where India competes directly.

Lutnick's assumption that India would finalise first underscores overconfidence in New Delhi's urgency. By prioritising other deals at elevated rates, the U.S. may have inadvertently diminished its leverage with India, which now faces a higher benchmark for concessions.

Indian officials have remained tight-lipped on Lutnick's remarks, neither confirming nor denying the call request. Commerce Ministry sources indicate that negotiations continue virtually, with a focus on mutual tariff cuts and non-tariff barriers, though no timeline for completion has been set.

Geopolitically, this episode intersects with India's deepening defence ties with the U.S., including co-production of fighter jets and drone technology. A trade rift could spill over, affecting initiatives like iCET (Initiative on Critical and Emerging Technology) and QUAD partnerships against Chinese assertiveness.

Economists warn that renewed U.S. tariffs could exacerbate India's trade deficit, already pressured by slowing global demand. Conversely, a deal could enhance supply chain resilience, positioning India as a viable alternative to China in U.S. manufacturing networks.

Lutnick's candid disclosure, unusual for a high-ranking official, signals impatience within Trump's team as it reshapes global trade post-2024 elections. For Modi, navigating this requires deft diplomacy, balancing energy security with economic pragmatism.

As 2026 unfolds, the India-U.S. trade saga remains a litmus test for their "comprehensive global strategic partnership." Whether Modi initiates that pivotal call—or an alternative breakthrough emerges—will shape not just commerce but the broader Indo-Pacific power equilibrium.

Agencies