India-US: A cautious rebound in relations after the ‘wobbles’ of 2025, according to an analyst

India-US: As both sides look forward to a possibly more fruitful 2026, India-US ties are now stabilizing after experiencing early diplomatic momentum in 2025, followed by trade-related friction and geopolitical differences, according to a prominent US-based India specialist.

In an interview with IANS, Richard Rossow, senior adviser and Chair on India and Emerging Asia Economics at the Centre for Strategic and International Studies (CSIS), said, “It’s definitely been an up and down,” about the development of bilateral relations during the previous year.

According to Rossow, India “got outta the gates better than most countries with how they engaged the Trump administration,” highlighting early outreach that included a meeting of the Quad foreign ministers and a head-of-state.

But he pointed out that disagreements about “what settled the India-Pakistan conflict” and worries in Washington over India’s ongoing purchases of Russian oil “triggered additional trade sanctions” soon surfaced.

Rossow said that despite these conflicts, the present stage seems more serene. “We don’t have the trade agreement done yet, but you don’t have quite the sense of day-to-day vitriol,” he said, adding that this may “set the table for a more successful 2026” .

Regarding commerce, Rossow said that India is still a difficult partner for US businesses, citing policies put in place since Prime Minister Narendra Modi took office that have made it “more difficult for US companies to export to India.” He said that some of those limitations continue to affect how the US is seen, especially in light of President Donald Trump.

Rossow said that India’s commercial position has changed. He mentioned significant trade agreements with Australia and the United Arab Emirates, lower taxes, and less mandated local manufacturing regulations. He pointed out that New Delhi now views trade openness as a means of integrating into international supply chains. “If you weren’t following the nuance, you hadn’t realised India’s position on trade has changed quite a bit,” he added.

According to Rossow, trade flows are durable despite political “wobbles.” Policy conflicts have not yet had “quite as big of an impact on real trade flows as we might expect,” he said, adding that “the trade numbers, you still see a year-on-year growth both in imports and exports.”

Rossow noted a recent drop in Indian shipments to the US, but he said final data are expected to show “high single-digit growth” when looking to 2025 trade growth. “Modest growth” is how he characterized this year’s expectations, but he indicated that a finalized trade agreement and the elimination of further tariffs might greatly boost prospects in the years to come.

A major barrier to reaching an agreement, according to Rossow, is the US president’s “really kind of demanding access to Indian basic agricultural commodities.” Since the majority of Indian farmers have no other choices for work, he cautioned that this is “dangerous territory” and that widespread liberalization is politically and socially delicate.

Rossow defended New Delhi’s position, arguing that India’s economy is still unequal, with low-productivity agriculture coexisting with highly productive services. “Further liberalisation has to be phased appropriately so you don’t dramatically disrupt people’s lives,” he said.

Regarding funding, Rossow said that recent multibillion-dollar US pledges to India’s AI industry demonstrate long-term planning. He said, “The world’s gonna have three Titanic economies,” projecting that India’s GDP will reach $20–25 trillion by the middle of the century and ultimately challenge China and the US for supremacy in the global economy.

Regarding reforms, Rossow said that while the Modi administration started off slowly in its third term, it has lately shown a renewed sense of urgency, highlighting modifications to the goods and services tax and laws that permit 100% foreign participation in insurance. According to him, New Delhi seems to understand that “the keys to growth are domestic” and mostly within the jurisdiction of the government.

With expectations for a trade deal, a postponed US presidential visit to India, a meeting of the Quad leaders, and an AI impact conference in February, Rossow said that the first quarter of 2026 will be “make or break”. He also mentioned the impending state elections as a factor influencing India’s ability to change.

Over the last 11 to 12 years, India has changed, according to Rossow, with a “more robust security posture,” more security cooperation with the US, and sporadic but important reform initiatives.

He said that despite times of stress, the partnership has consistently shown resilience. “The people ties, the commercial ties, security ties, you know, it’s enough glue,” he added.

Despite their disagreements on trade policy and international concerns, India and the US have gradually increased their collaboration in defense, technology, and strategic forums like the Quad during the last ten years. The US is now one of India’s biggest commercial partners due to the significant growth in bilateral trade.