New Delhi | January 9, 2026

A key aide of former US President Donald Trump has claimed that the stalled India-US trade deal failed primarily because Prime Minister Narendra Modi did not make a call to Trump to finalize the agreement. US Commerce Secretary Howard Lutnick, in a recent podcast interview with entrepreneur Chamath Palihapitiya, described the negotiations as “all set up” but said the deal could not be concluded due to New Delhi’s hesitance to engage at the highest leadership level.

Lutnick, who played a central role in trade discussions with India during the Trump administration, recounted, “It’s all set up, but I said I gotta have Modi call the President… they were uncomfortable doing it, so Modi didn’t call.”According to him, India and the US were very close to finalizing a deal, but New Delhi was reportedly “on the wrong side of the see-saw” in terms of timing and political readiness.

He further explained that the US had arranged trade agreements with countries such as Indonesia, Vietnam, and the Philippines shortly thereafter. India’s deal, he claimed, was meant to be completed before those nations, and Lutnick said he had negotiated the terms for India at a higher tariff rate in anticipation of early closure.

Context: Tariffs and the Russian Oil Issue

The backdrop to these claims is the 50% tariff imposed by the US on Indian goods in August 2025, particularly targeting New Delhi’s oil trade with Russia. The Trump administration has reportedly used these tariffs as leverage to push India to reduce its dependence on Russian energy.

Trump himself had hinted recently at a potential escalation, warning that tariffs could be increased if India did not align with US demands on Russian oil. Lutnick echoed this concern, indicating that the deal’s failure could have been avoided if New Delhi had engaged more directly with Trump.

However, Indian officials have consistently maintained that the country’s energy trade is driven by market dynamics and domestic requirements, not political pressure. Union Minister Piyush Goyal had emphasized in October 2025 that India is open to discussions but would not be rushed into a deal “under momentary pressure” or face deadlines. He stated, “We are talking to the United States, of course, but we don’t do deals in a hurry, and we don’t do deals with deadlines or with a gun on our head.”

Looming Threat of Increased Tariffs

The Trump administration’s push to influence India’s energy policy has also drawn attention in Congress. US Senator Lindsey Graham recently claimed that Trump has given his go-ahead for the Russia Sanctions Act of 2025, a bill that proposes massive tariff hikes of at least 500% on countries trading Russian-origin uranium and petroleum products. India, as a significant buyer of Russian energy, could be impacted if the bill becomes law.

The legislation is designed to pressure Russia to halt its military operations in Ukraine, using punitive tariffs on its trading partners as leverage. For India, this scenario would translate into significantly higher costs on exports to the US if the country continues trading with Russia.

Trade Negotiations: A Timeline

Trade discussions between India and the US have been ongoing since early 2025. Multiple rounds of in-person negotiations took place throughout the year, including a visit by a team led by Deputy US Trade Representative Rick Switzer to India in December. Despite these efforts, the deal remains incomplete, leaving both sides in a state of uncertainty.

Lutnick’s statements suggest that, from the US perspective, leadership-level engagement—specifically a phone call from Prime Minister Modi—was crucial to sealing the deal. The lack of this direct communication, according to him, resulted in India missing its window to benefit from the US’s “staircase” tariff approach, which offered progressively higher tariffs to countries that signed later.

India’s Response

So far, there has been no official response from the Indian government to Lutnick’s remarks. Historically, India has maintained a firm stance on its strategic autonomy in trade and energy policy, balancing economic interests with geopolitical considerations. Officials have reiterated that all deals must be consistent with national interests, and that India will not succumb to undue external pressure.

With potential US legislation threatening even more stringent tariffs, the India-US trade relationship faces a critical juncture. While discussions are ongoing, India’s position remains deliberate and cautious, prioritizing long-term strategic and economic interests over expedited agreements.

Implications for India-US Relations

The breakdown of the deal underscores the complex interplay of diplomacy, domestic politics, and trade policy. Analysts note that while the Trump administration sought quick resolutions through personal engagement, India’s approach highlights the importance of measured, policy-driven decision-making.

Experts also point out that such incidents may influence future trade negotiations, with India potentially emphasizing formal mechanisms over personal outreach, ensuring that agreements are concluded based on technical merit rather than leadership-level optics.

The situation remains fluid, with tariff pressures, legislative proposals, and bilateral negotiations all intersecting in a delicate balance. How India navigates these challenges will shape not only its trade with the US but also its broader economic and geopolitical strategy in the Indo-Pacific region.

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