India US Trade Relations at Risk as Politics Trumps Economics

India US Trade Relations at Risk as Politics Trumps Economics

Last Updated Oct - 27 - 2025, 10:24 AM | Source : Fela News

Growing geopolitical tension between India and the US threatens a potentially beneficial trade deal.

In a recent commentary, analyst Mihir Sharma explores how the economic relationship between India and the United States, which holds enormous promise, is being overshadowed by political posturing and strategic miscalculations. 

Despite prolonged negotiations signalling that a trade deal is within reach, both countries appear reluctant to compromise. For India, the pressures of asserting its strategic autonomy especially given its ties to Russia and its participation in multilateral groupings mean that accepting terms favourable to the US could be politically costly at home. For the US, domestic political imperatives and strategic calculations around China and Russia may be limiting its flexibility in trade talks. 

Sharma argues that economic sense often demands compromise: tariffs may need to be lowered, market access granted, and some domestic protections adjusted. When politics is allowed to dominate, the risk is that both nations walk away from the table with sub optimal outcomes or any deal gets so watered down that its value is lost. The commentary suggests that the real cost of letting politics dominate is not just the deal itself but the opportunity cost of delayed economic benefits jobs, investments, growth.

For India, which is targeting manufacturing, exports and global integration, being overly rigid may limit its ability to leverage the US market or benefit from technology and supply-chain linkages. For the US, a strong India is useful in balancing China, but if trade becomes a zero-sum game driven by domestic politics, that strategic advantage may evaporate. The nuanced point is that neither side wins when the other loses a mutually beneficial deal requires trust, credible commitments and a willingness to share risk.

In short, the commentary cautions: if India and the US allow political agendas to override economic logic, they may end up sacrificing real growth prospects, strategic leverage, and long-term partnership. The key task is shifting the conversation from “who loses” to “how both gain” and that requires statesmen, negotiators and business leaders to push past short-term politics and align on the fundamentals of mutual economic interest.

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