Context: On October 8, the U.S. announced the suspension of the Permanent Labour Certification (PERM) programme for eight global IT companies, including Indian-headquartered Infosys, TCS, Wipro, Cognizant and HCL, alleging misuse of immigration and labour-certification systems.
- PERM programme: Enables employers to obtain labour certification for hiring foreign professionals as part of an employer-sponsored U.S. green-card application.
- The U.S. government stated that the companies had received over 2,30,000 H-1B visa approvals and 1,00,000 permanent labour certifications since 2009.
- Indian professionals account for over 70% of approved H-1B petitions annually, making immigration policy a major bilateral concern.
Trade Ties: Sources of Discord
- Trade imbalance: India recorded a $33.8 billion trade surplus in bilateral trade exceeding $140 billion in FY 2025–26.
- Agricultural market access: The U.S. seeks greater access to India's dairy and agriculture sectors, which India considers sensitive.
- Russian oil imports: India's refusal to halt Russian oil imports despite additional U.S. tariffs and sanctions has strained relations.
- Stalled negotiations: Despite the February 2026 framework for an interim reciprocal trade agreement, negotiations have reportedly plateaued, with limited scope for compromise.
Defence and Security Cooperation
- Expanding cooperation: Over two decades, India and the U.S. have expanded military exercises, logistics arrangements and intelligence-sharing.
- Defence imports: Since 2002, India has acquired over $22 billion worth of American military hardware.
- Technology-transfer deficit: Despite growing defence purchases, meaningful co-production and technology transfer remain limited.
- Proposed defence cooperation: During Prime Minister Narendra Modi's February 2025 visit to Washington, the U.S. agreed to expand defence sales and co-production, including Javelin anti-tank guided missiles and Stryker infantry combat vehicles.
- Major Defence Partnership: The two countries signed a 10-year Framework for the U.S.-India Major Defence Partnership on October 31, 2025.
- Supply-chain vulnerability: Delays in supplying GE F404 engines for Tejas fighter aircraft highlight the risks of dependence on foreign suppliers for critical military components.
- INDUS-X: The India-U.S. Defence Acceleration Ecosystem, launched in 2023, aims to promote defence innovation and cooperation, but challenges in co-development and technology transfer persist.
The Pakistan Factor
- Operation Sindoor (May 2025): U.S. President Donald Trump's repeated claims of ending the India-Pakistan conflict have caused diplomatic irritation in New Delhi.
- U.S.-Pakistan engagement: Washington's engagement with Pakistan's top leadership, particularly its Chief of Defence Forces, Asim Munir, has raised concerns in India.
- Mecca Pact: The reported pact involving Saudi Arabia, Pakistan and Türkiye, reportedly with Washington's blessings, has generated additional Indian security concerns.
High-End Technology Cooperation
- India-U.S. Civil Nuclear Agreement (2008): A landmark breakthrough in bilateral nuclear cooperation, but the commercial promise of American-designed nuclear reactors in India remains largely unrealised.
- Initiative on Critical and Emerging Technology (iCET): Launched in 2023 to deepen cooperation in artificial intelligence, semiconductors, defence innovation, space and other advanced technologies.
- TRUST Initiative: The Transforming the Relationship Utilizing Strategic Technology (TRUST) Initiative, signed on February 13, 2025, seeks deeper technology cooperation and integration.
- Implementation gap: Despite multiple initiatives, translating declarations into measurable outcomes, technology transfer and indigenous capabilities remains a key challenge.
Challenges in India-U.S. Relations
- American unilateralism: U.S. decisions on tariffs, sanctions and immigration can impose costs on India without adequate consideration of its strategic interests.
- Strategic autonomy: India's continued engagement with Russia, including energy imports, reflects its pursuit of an independent foreign policy.
- Economic asymmetry: Disagreements over trade surpluses, agricultural access and tariffs complicate negotiations.
- Technology dependence: Limited technology transfer and delayed supplies expose India's defence and industrial sectors to external supply-chain risks.
- Regional security differences: Divergent approaches towards Pakistan and South Asian security create strategic friction.
Way Forward
- Mutual respect: Base bilateral engagement on sovereign equality, trust and reciprocity, rather than unilateral pressure.
- Balanced trade agreement: Address market-access concerns while safeguarding India's sensitive agricultural and dairy sectors.
- Defence indigenisation: Prioritise joint research, co-development, co-production and technology transfer over import dependence.
- Technology partnerships: Establish measurable targets and implementation timelines under iCET and TRUST.
- Constructive strategic dialogue: Manage differences over Russia, Pakistan, immigration and regional security through institutional dialogue.
- Diversified partnerships: Strengthen domestic capabilities and diversify critical technology and defence supply chains while maintaining cooperation with the U.S.
Conclusion: India-U.S. relations are strategically important but face growing friction over trade, immigration, defence technology and regional security. A durable partnership between the world's oldest and largest democracies requires equality, mutual respect, trust and tangible outcomes, rather than unilateral imposition of interests.
