India has reportedly paused plans to purchase weapons and aircraft from the United States following the imposition of increased tariffs by former U.S. President Donald Trump. This decision signals growing discontent within India regarding the trade policies of the U.S., particularly the recent tariff hikes on Indian exports.
Stalled Defense Deals
Several significant defense procurements are now on hold, including:
These purchases were expected to be announced during a visit by Indian Defence Minister Rajnath Singh to Washington, D.C., which has now been cancelled. The Indian Ministry of Defence (MoD) has decided to reassess the Boeing deal, considering rising costs, geopolitical factors, and the need for strategic autonomy before making a final decision.
Tariff Escalation and India's Response
The U.S. decision to increase tariffs on Indian goods stems from India's continued import of Russian crude oil. Trump announced an additional 25% tariff on Indian goods, raising the total duty to 50%, which is among the highest rates applied to any U.S. trading partner. The 25% baseline tariff came into effect on August 7, 2025, with the additional 25% tariff on crude oil imports from Russia set to be effective from August 27, 2025.
India views these tariffs as unjustified, arguing that other nations, including the U.S. and European countries, continue to trade with Russia when it suits their interests. India's Ministry of External Affairs has accused the U.S. and EU of double standards, pointing out that these countries import substantial volumes of goods, including energy, from Russia.
Prime Minister Narendra Modi has asserted that India will protect the interests of its farmers and is prepared to face personal consequences if necessary. The Indian government is also evaluating its market access proposals to the United States and remains optimistic about finalizing a Bilateral Trade Agreement (BTA).
Impact on India's Economy and Defense Modernization
The increased tariffs pose a threat to India's exports to the U.S., which amounted to $87 billion in 2024. Key sectors such as gems and jewellery, automobiles, and textiles are expected to face significant pressure. Moody's has warned that the tariffs could significantly impact India's manufacturing goals, and Morgan Stanley has suggested that prolonged tariffs could reduce India's economic growth by 0.4 to 0.8 percent.
In response to U.S. unreliability, India is diversifying its defense procurement strategy. The country has strengthened ties with France, as demonstrated by a €7.4 billion deal for 26 Rafale Marine fighter jets, which includes technology transfer provisions. Defense cooperation with Israel has also expanded significantly, with increased arms imports and joint development of missile systems and cooperation in UAV technology. Despite Western pressure, India continues its defense relationship with Russia, which remains a major defense supplier.
Focus on Indigenous Defense Production
India is also focusing on boosting its indigenous defense capabilities. The country's defense production increased by 174% in FY 2023-24, with a significant portion of new contracts awarded to domestic industry. The MoD is prioritizing indigenous alternatives, such as unmanned maritime platforms developed by the Defence Research and Development Organisation (DRDO). For example, Tata Motors has developed the Kestrel, an indigenous Infantry Combat Vehicle (ICV) that could replace the need for U.S.-made Stryker vehicles.
US-India Relations
Despite these trade tensions, the underlying strategic alignment between the U.S. and India, particularly concerning shared concerns about China, remains intact. Cooperation continues in areas such as intelligence sharing and joint military exercises. Both countries are aware of the security concerns in the Indo-Pacific region and have the ability to counter threats together. The U.S. has expressed satisfaction with the integration of U.S. defense items into India's inventory and hopes to expand defense industrial cooperation and co-production efforts.
In February 2025, the U.S. and India launched the "U.S.-India COMPACT (Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology) for the 21st Century” to drive transformative change across key pillars of cooperation. Both sides are also working towards a new ten-year Framework for the U.S.-India Major Defense Partnership.
