Context

• The proposed India–United States Bilateral Trade Agreement has sparked intense political and public
• Although the agreement itself has not yet been finalised, discussions surrounding it have already revealed important questions about India’s economic policy and foreign relations.
• The Indian government’s primary objective is understandable: to ease the burden of high U.S. tariffs and to strengthen economic growth through expanded trade access.
• The emerging framework suggests that the agreement may extend beyond commercial cooperation and enter the realm of foreign policy alignment.

The Nature of the Negotiation Process

• Unilateral Announcements
  • A striking feature of the negotiations is the imbalance in communication. Nearly all major details about the agreement have been revealed by the United States rather than India.
  • The first indication of progress came from a public statement by the U.S. President, followed by executive orders and official documents released in Washington.
  • India’s responses, in contrast, were limited and delayed.
  • This sequence creates the perception that India is reacting to developments rather than shaping them.
  • When a joint statement appears first from one party, it raises a fundamental question: Is the agreement being negotiated between equals, or is one side dictating the terms?
• Implications of Asymmetry
  • The communication pattern suggests a power imbalance. Instead of a mutual negotiation, the process resembles a situation in which India must adjust its policies to obtain tariff relief.
  • Such a precedent is significant because it may influence the nature of future agreements between the two countries, not only in trade but also in strategic and defence cooperation.

The Energy Security Question

• Importance of Russian Oil
  • India has relied significantly on discounted Russian oil to ensure affordable energy for its population and industry.
  • At one point, Russia accounted for approximately 40% of India’s oil imports.
• Recent Changes
  • Recent data indicate a decline in Russian oil purchases despite increasing discounts.
  • The reduction appears inconsistent with earlier policy statements prioritising affordable energy for Indian consumers.
  • The change suggests that political pressure, rather than economic logic, may be shaping energy policy.
• Economic vs Political Choice
  • If India abandons cheaper energy sources due to external pressure, it may compromise domestic economic interests.
  • This situation raises a critical question: Should trade benefits justify altering independent energy decisions?

Diplomatic Consequences

• Relations with Russia and Iran
  • Reducing engagement with Russia and Iran risks damaging India’s credibility as a reliable economic partner.
  • Countries that once considered India a stable and independent collaborator may reassess their trust.
• Impact on the Global South
  • India has historically positioned itself as a leader among developing nations, often resisting unilateral sanctions not authorised by international institutions.
  • Compliance with external demands may weaken this image and reduce India’s diplomatic influence.
• Relations with Other Trade Partners
  • Preferential treatment toward the United States could also cause friction with other economic partners, including the European Union and recently negotiated trade partners.
  • This may complicate India’s broader trade strategy.

Strategic and Geopolitical Implications

• Regional Balance of Power
  • Curtailing projects such as the Chabahar port and reducing engagement with Iran could unintentionally strengthen China’s regional influence.
  • The agreement, therefore, has implications beyond economics and affects regional geopolitics.
• Future Agreements
  • If tariff relief requires political alignment, future cooperation in defence, security partnerships, counter-terrorism, and Indo-Pacific strategies may also involve similar conditions.
  • The precedent could fundamentally reshape the India-U.S. partnership.

Strategic Autonomy and Historical Context

• India’s Foreign Policy Tradition
  • Since independence, India has followed a policy of strategic autonomy, maintaining relations with multiple powers without formally aligning with any single bloc.
  • This approach allows flexibility in diplomacy and protects sovereign decision-making.
• Comparison with RCEP Withdrawal
  • In 2019, India withdrew from the Regional Comprehensive Economic Partnership due to concerns about economic dependence and policy constraints.
  • Accepting stronger conditions in the present agreement would appear inconsistent with that earlier decision.
• Risk to Multi-Alignment
  • The proposed trade agreement may narrow India’s foreign policy options rather than expand them.
  • Instead of multi-alignment in a multipolar world, India could appear increasingly tied to one major power.

Conclusion

• The India-U.S. Bilateral Trade Agreement offers clear economic benefits, particularly relief from punitive tariffs and greater market access.
• The manner of negotiation, the linkage of trade with foreign policy, and the potential impact on energy security and diplomatic relationships suggest that the agreement is far more than a commercial arrangement.
• If economic gains come at the expense of independent decision-making, India risks compromising its long-standing principles of strategic autonomy and diplomatic balance.