Even as we await the contours of the full deal, some early indications are out. India and the US will nearly double the total trade to $500 billion by 2030. Also, the trade deal talks about the US giving F-35 fighter jets to India and will count on India as a major market for US oil. In response to allowing India to expand the exports, to the US, Trump expects steep rates of import duties reduced on key high-end items. Rate has been cut on key items, including bourbon whisky.  

The Indian armed forces, in the recent past, have underlined that if India has to be able to stand up to China, it needs a major boost to its air power. That can only be achieved if the US sells its high-end F-35 fighter aircraft to India. That is something that is finally likely to happen by the year 2026, giving the Indian Air Force a major shot in the arm. Even as a strategic defence, it will substantially improve India’s bargaining power with the Chinese. While in-sourcing defence has worked in low-end products, India still needs the irrefutable defence tech that only the US can provide. That, and, support for nuclear energy will be key. 

Trump has underlined that he wants India to buy more of US oil. Currently, the US is among the top-5 suppliers of crude to India, but accounts for only 4.4% of the oil import basket, while the share of Russia is nearly 38%. Russia offers discounts and importing from the Middle East is cost effective. However, Trump is keen that India buys oil from the US and also expands its share, so that the trade surplus that India enjoys will be cut. The other contentious issue will be retaining the dollar as the central currency. That means; India will not be party to any BRICS plan for alternate payment system to the current SWIFT, which is largely dominated by the West. 

For Trump and for Modi, the Indo-US cooperation deal will be measured in terms of economics. However, there is also some accommodation that India may have to show towards the US. By importing more oil from Russia and the Middle East, India only adds to her trade deficit. On the other hand, cooperation with the US can eventually help expand the trade surplus. India has to also look at strategic considerations especially in the light of Russia becoming extremely dependent on China, economically. That will cloud their decision, so the only way for India is to rebuild bridges with the US. The process has started on a right note, but now comes the tough part!