India and the U.S. have a long standing history of trade in the 21st century. Software exports are worth $109 billion plus as of 2024. Unfortunately, the uncertainty of geo-politics has put India in a very tough position and it has to make tough decisions, especially in the balancing act between the U.S. and China as partners.  

The stand with the U.S. – everything depends on Trump 

Over the last four months the tariff wars have been confusing for business folks of many countries. India has actually signed so many treaties and agreements with the U.S. that sometimes Indians have to wonder why India has to align with America exclusively, especially in a world which can actually work together. Yes, globalisation is gone, but it’s the Americans who rolled out globalization and it is the Americans who are pulling back.  

Let’s look at India’s tete-a-tete with the U.S.A.  

India has joined U.S. initiatives such as the Mineral Security Partnership, to form an alliance to counter China’s dominance over critical minerals, and has also signed the Artemis Accords. The latter is a non-binding treaty for cooperation to use outer space for strategic purposes.  

India is also part of the Critical and Emerging Technology (iCET) and the India-U.S. Defense Acceleration Ecosystem (INDUS-X).  

At the centre of all this is the India US Strategic Trade Dialogue (IUSSTD) to facilitate high tech trade, which could benefit India and the U.S. as strategic partners.  

However, Trump can rewrite history.  

Here is why?  

India is currently classified as an A5 country under the Strategic Trade Authorization, it is classified as a tier-1 vendor, which, at the moment, means that there will be less of export regulations. However, the proposed amendments to the STA regime, if implemented, could club India (an A5 country) with A6 countries. This could affect a software company in a strategic industry such as defence or space if the IP is registered within India. It can also affect Indian agricultural exports to the U.S.  

The proposed STA amendment rules remove STA eligibility for export of software used for UAVs for A5 countries and brings such A5 countries at par with A6 countries, which was not the case earlier. This means exporting IP led products to the U.S. is going to get difficult. Several Indian SaaS companies have strategically incorporated their U.S. and India business. The IP will be registered in the U.S. while Indian engineers continue to build the product for the global market. A classic example is the successful IPO of Freshworks.  

The narratives differ in both countries for every corporation.  

Indian businessmen have to also study the Enhancing National Frameworks for Overseas Restriction of Critical Exports (ENFORCE) Act, which would make it easier for any U.S. administration to impose export control measures on Indian IP in artificial intelligence (AI), a move which India is making as recent press announcements suggest where India is building its own LLMs. Indian firms use open source software and ENFORCE does not support open-source AI models emanating in regions outside of the U.S.  

This will be a set back for Indian AI firms, which rely heavily on open-source AI models. The IUSSTD can actually usher further cooperation on AI, but it will be under U.S. terms and also Trump’s decisions. If these past agreements get ratified, even then, they do not impact the American Global Excellence Centres based in India. These laws will affect IP from India that can be used in the USA. The most interesting aspect of them all is that Trump’s or every U.S. administration’s need to coax India to set up a base in the region or sign defense deals in their favour. What the world leaders will realise is that China has the upper hand when it comes to trade whether one likes it or not.  

In political terms this soft arm twisting, by the U.S., can be platooning India towards defence contracts to isolate China.  

It’s all related to defense  

In Trump’s first term he made India sign three agreements, namely, the Communications Compatibility and Security Agreement (COMCASA), the Basic Exchange and Cooperation Agreement (BECA), and Industrial Security Annex (ISA).  These agreements were for enhanced military cooperation and intelligence sharing. 

This move actually signals a good thing for Indian startups in the defence sector, but to make it big they have to move their IP to the U.S.  

Therefore India is treading a thin line between the U.S. and China. The former is a major strategic defence partner and the latter is a strategic trade partner.  

Indian companies are dependent on geo-political decisions which are becoming a nightmare for CEOs to make investment bets. It is true that India is dependent on the U.S and Israel for defense related partnerships. That said, the Make-in-India movement still sources critical components such as lithium-ion batteries, micro controllers, plastics, chemicals, fertilizers and iron and steel from China.  

While Trump will continue to push for manufacturing to move to the U.S. he will also push partner nations to sign key mineral mining agreements and buy U.S. weapons technology. By doing so American military hegemony will continue, sadly, it will impact the dollar’s hegemony.  

India is actually in a strong position to negotiate with China and the U.S.A because of its significant experience in handling both nations over 70-years.  

Also a significant portion of India’s population has had global exposure and from there its business leaders have grown in strength. It is no longer in a weak position, like it was in 1961 or in the 1980s. The Indian leadership from the nineties has strategically focused on alleviating a significant portion of the population away from poverty. 

Unfortunately, 2025 marks the end of globalization. This new era is the beginning of a fractured global order where the power structures are shifting to nations that invested in technology and people. Between 1947 and 1965 India strengthened ties with the Soviets because of its self reliance policy. Its strategic errors in handling China, before 1991, and its often awkward way of handling the U.S., when it came to the latter’s trade related and defence dictates from the sixties to 1991, made India their reluctant global partner.  

Once India’s tryst with socialism was over, India began to globally express itself and continues to be a welfare state that is balancing new age capitalism. Its focus on building talent for global industry has become the basis for its relationship with the U.S. Unfortunately, the U.S. will push India to support its bid to control China. Whatever happens now the U.S. cannot force India to take sides, neither can China force India into a trade stalemate.  

It’s best for Indian global leaders to lobby with the U.S. about the long term nature of the relationship in defense and technology. It’s also best to reinforce the ancient relationship that China and India carry with each other. That said, the mistakes of 1961 should not repeat itself.  

India is no longer non-aligned, it will be strategically aligned to the new order on its own terms because of a growing business ecosystem that supports global industry. Finally, for India to be self-reliant this is a wonderful opportunity to use this fractured geo-politics to create its own path in sustainable agriculture and poverty reduction. More so face new challenges such as climate change.