Can Modi and Trump Strike an Interim Trade Deal?

On Wednesday, September 30, 2026, Prime Minister Narendra Modi’s secure phone line to Washington crackled to life. It was his first formal conversation with US President Donald Trump since their brief encounter at the G7 summit in Evian, France, on June 17, 2026. Within hours of this high-level call, Indian Commerce and Industry Minister Piyush Goyal was huddled in a meeting room in Milwaukee, Wisconsin, with the newly minted US Trade Representative, Jamieson Greer.

The timing of these two events was not coincidental. It was a coordinated diplomatic offensive designed to break a long-standing deadlock. For months, trade relations between New Delhi and Washington have simmered with tension. Now, we are seeing a concerted push from the very top to secure an interim trade agreement under the broader India-US Bilateral Trade Agreement (BTA).

Let us sit down over a hot cup of chai and analyse what is actually happening behind the closed doors of these negotiations. To the casual observer, the flurry of official statements suggests a breakthrough is imminent. US Ambassador to India Sergio Gor was quick to characterise the Modi-Trump call as very good in his public remarks. On his part, Minister Goyal took to social media to report productive discussions aimed at an early conclusion of a mutually beneficial interim pact. But those of us who have spent years tracking the corridors of South Block know that the devil in trade diplomacy is never in the polite press releases. It is always in the fine print of tariff schedules and regulatory compliance.

We must ask a fundamental question. Can India and the United States actually resolve their deep structural trade disputes, or is this interim deal merely a temporary band-aid? The backdrop to these talks is exceptionally challenging. Minister Goyal and USTR Greer are negotiating under the direct shadow of proposed 100% tariffs that Washington is threatening to levy on Indian goods. This is classic Trumpian diplomacy: brandish a heavy stick while inviting the other side to the negotiating table. For India, the stakes could not be higher.

To understand the urgency, we have to look at the recent past. The bilateral relationship has faced recurrent strain over the last year. It was only in 2025 that New Delhi had to repeatedly dispute Trump’s public claims that he had mediated an end to the India-Pakistan conflict. That episode left a bitter taste in the mouths of Indian diplomats. It reminded Raisina Hill that dealing with the current US administration requires a high degree of caution. Yet, economics has a way of forcing adversaries to find common ground. The United States remains India’s largest trading partner, and Indian exporters cannot afford to be locked out of the American market by punitive duties.

This is why the Indian delegation has chosen to pursue an interim trade agreement rather than a comprehensive Bilateral Trade Agreement. In trade parlance, this is an early harvest strategy. The logic is simple. Instead of getting bogged down in complex issues like intellectual property rights, data localisation, and labour standards, both sides are trying to identify a limited basket of goods where they can offer mutual concessions. Indian Commerce Secretary Rajesh Agrawal confirmed this pragmatic approach. He noted that all trade issues would be on the table during Minister Goyal’s week-long visit, which runs from September 29 to October 5, 2026.

What does Washington want from New Delhi? The American wish list has remained remarkably consistent over the years. US negotiators want greater market access for American agricultural products, dairy goods, and medical devices. They want India to lower its high tariffs on information technology products and motorcycles. For a protectionist US administration, reducing the bilateral trade deficit with India is a major political priority. Trump wants to show his domestic working-class constituency that he is opening up foreign markets for American farmers and manufacturers.

On the other side of the ledger, what is India seeking? First and foremost, New Delhi wants an exemption from any future steel and aluminium tariffs. Indian exporters also want the restoration of India’s beneficiary status under the Generalised System of Preferences (GSP) programme. This programme was summarily terminated during Trump’s first term in office. It previously allowed billions of dollars of Indian exports to enter the US duty-free. Furthermore, Minister Goyal is pushing for easier visa access for Indian IT professionals, a crucial driver of India’s service sector growth.

Let us be clear: trade negotiations with Washington are never a walk in the Lodhi Gardens. The trade bureaucracies of both nations are notoriously defensive. The babus in New Delhi are fiercely protective of India’s domestic agricultural sector. They know that opening up Indian dairy or poultry markets to cheap American imports would be politically disastrous at home. Millions of small-scale Indian farmers depend on state protection for their livelihoods. No government in New Delhi can afford to sacrifice their interests for the sake of a trade deal with Washington.

This domestic sensitivity was on full display during the G20 Trade Ministers’ Meeting in Milwaukee. Speaking at a session on global supply chains, Minister Goyal made a pointed intervention. He addressed the weaponisation of food via coercive trade practices. He asserted that food must remain a source of security, stability, and cooperation. While his comments were framed in the context of global supply chain resilience, they served as a subtle reminder to Washington. India will not allow its food security or its agricultural sovereignty to be compromised by external economic pressure.

This brings us to the broader strategic dimension of India’s trade policy. Under the Modi government, India has consistently refused to put all its economic eggs in one basket. Even as Minister Goyal was negotiating with USTR Greer in Milwaukee, he was busy working the room. He held key bilateral meetings to deepen trade ties with Mexico’s Secretary of Economy Marcelo Ebrard and Poland’s Minister of Finance and Economy Andrzej Domański. He also engaged with his Brazilian counterparts to explore new avenues of economic cooperation.

This multi-alignment strategy is highly deliberate. By diversifying its trade partnerships across Latin America and Eastern Europe, India is building a buffer. It is reducing its vulnerability to the volatile trade policies of the major economic superpowers. If Washington decides to go ahead with its threatened 100% tariffs, India will have alternative markets ready to absorb its exports. It is a sophisticated game of economic hedge-building that reflects India’s growing confidence on the world stage.

Yet, we must recognise that the strategic partnership between India and the United States cannot be entirely decoupled from their trade disputes. The Modi-Trump phone call on September 30 was not just about trade tariffs. The two leaders also reviewed their bilateral cooperation in energy, defence, and critical technologies. These are the real pillars of the contemporary India-US alliance. From joint military exercises in the Indo-Pacific to co-development programmes for jet engines, the strategic convergence between New Delhi and Washington has never been stronger.

Can this strategic warmth survive persistent trade friction? Historically, the United States has treated trade and national security as separate columns in its foreign policy ledger. It is entirely possible for Washington to view India as a vital geopolitical counterweight to China while simultaneously treating it as a trade adversary. We saw this dynamic play out during Trump’s first presidency. It is a transactional approach to foreign policy that Indian policymakers have had to learn to navigate. We must accept that in the eyes of the current US administration, friendship does not guarantee trade concessions.

So, what is the most likely outcome of the current negotiations? As Minister Goyal continues his engagements in the United States through October 5, 2026, we should expect to see the outlines of an interim agreement emerge. Both sides have a strong political interest in claiming a victory. For President Trump, a quick deal with India would bolster his credentials as a master dealmaker. For Prime Minister Modi, securing an interim pact would provide much-needed stability for Indian exporters and protect the domestic economy from a damaging tariff war.

However, we should not expect a grand, sweeping treaty that resolves all outstanding disputes. Any agreement signed in the coming weeks will likely be modest in scope. It will probably focus on minor tariff reductions on a select group of agricultural and industrial goods. It may also include some regulatory tweaks to ease market access for specific sectors. The more contentious issues, such as intellectual property rights and digital trade, will almost certainly be kicked down the road.

For India, a limited interim deal is a sensible compromise. It keeps the channels of communication open. It defuses the immediate threat of punitive American tariffs. Most importantly, it buys New Delhi valuable time to continue its domestic economic reforms and strengthen its global trade networks. We must remember that trade negotiations are a marathon, not a sprint. In the high-stakes game of global commerce, sometimes the best outcome is simply staying in the game without losing your shirt.

As we watch the final days of Minister Goyal’s visit unfold, we should keep our expectations measured. The high-level political momentum from the Modi-Trump call has provided a welcome spark. But the hard work of translating that political goodwill into a binding legal text is now in the hands of the negotiators. It will require flexibility, pragmatism, and a willingness to compromise from both sides. Whether Washington is prepared to show that flexibility is the real question we must watch in the days ahead.

Arjun Mehta, AHN