Do not squander the opportunity

The Indo-US relations have never been linear and secular like Indo-Russia (Indo-Soviet) relations. Moreover, the Indo-US relations have mostly been transactional and opportunistic; with very little connect on cultural and social level.

Both countries have based their strategies on their respective abilities to exploit the available opportunities. In the past three decades, India has significantly gained from the shortages of highly skilled human resources in the US. We have also shared the gains (with other emerging economies) from the US strategy of relocating their manufacturing processes. The US has benefitted from selling technology, energy and defense equipment to India. Besides, India has been an attractive high growth potential opportunity for US capital.

Evidently, the US administration now seeks to redefine this transactional relationship. The present strife in the Indo-US relations may therefore sustain much longer than what most of us would have expected a couple of months ago.

The Trump shock: what changed

In recent months, India’s relationship with the United States has entered a turbulent phase. President Donald Trump’s administration has imposed penal tariffs targeting India’s labor-intensive exports, rolled back strategic assurances, and reignited ties with Pakistan in ways that ignore India’s security concerns. The tightening of H-1B visa rules and deportations of overstaying Indian citizens have also strained people-to-people ties.

This shift has disrupted Indian business models that relied heavily on US consumers, technology, capital, and immigration pathways. The transactional nature of Indo-US relations has always meant that strategic alignments could shift rapidly. The Trump administration’s America-first strategy has redefined the terms of engagement.

Under the circumstances, it would be a normal strategy for the US businesses and policymakers to work on an India+1 strategy for their merchandise, human resource and strategic support requirements. The policymakers would want Indian businesses to invest in the US to “Make in America” and “Hire Americans”.

It is therefore important that the Indian businesses and policymakers have a long-term strategy to mitigate the impact of the change in American strategy and ensure a sustainable growth for the Indian economy.

Lessons from 1998: Turning sanctions into strength

This is not the first time India has faced strategic setbacks from the US. In 1998, following nuclear tests, India faced severe sanctions. Rather than bowing to pressure, India leveraged the situation to accelerate reforms and investments. These reforms laid the groundwork for India’s high growth phase in the 2000s.

The subsequent governments continued to focus on increasing “self-reliance” and “energy security”. However, momentum slowed down considerably as India grew comfortable with much improved relations with the US, Japan and the EU, in the past two decades.

(More on lessons from 1998 tomrrow)

Why this is an opportunity, not just a setback

Just as in 1998, India can turn adversity into opportunity. Trump’s policies are part of a broader global trend: protectionism, supply-chain re-shoring, and weaponization of trade.

History shows that India thrives when external shocks force inward reform. The Trump administration’s adversarial stance should not be viewed as an existential threat but as a catalyst for bold domestic policy shifts.

Taking a myopic approach—by rushing to invest in the US to appease Trump—would dissipate this opportunity. Instead, India should use this moment to:

·         Build resilience

·         Accelerate reforms

·         Position itself as an important global manufacturing and innovation hub

 

…to continue tomorrow Lessons from 1998