EMILY KWONG: After months of wrangling and much tension, India and the U.S. have finally released a framework for an interim trade agreement. It's a deal that's being cheered in the U.S. and jeered by some in India. On the line to tell us more as NPR's Diaa Hadid in Mumbai. Hi, Diaa.
DIAA HADID, BYLINE: Hi, Emily.
KWONG HOST: So this trade deal was first announced in a post on Truth Social by President Trump. What's been agreed upon?
HADID: Yeah, so President Trump said that he was lowering tariffs on India from 50%, which is among the highest in the world, to 18%. That high tariff rate was because India is a major buyer of Russian oil, and Trump said the Indian prime minister, Narendra Modi, had agreed to stop buying that oil. He said India would also lower its tariffs to zero on American products.
KWONG HOST: Wow.
HADID: Yeah. By February, though, the two sides released a joint statement. It reflected most of what Trump said but with more nuance. And he signed an executive order reducing tariffs by half. So it's 25% now and we expect it to go down further. But this trade deal remains controversial to some in India, like Siddharth Varadarajan. He's the editor of The Wire. It's an outlet often critical of Modi's government.
SIDDHARTH VARADARAJAN: This is as close to a capitulation as you can find anywhere in the world.
KWONG HOST: Capitulation - what does he mean by that?
HADID: Yeah. Well, there's a few reasons but, chiefly, it's because this trade deal reduces tariffs on some American farm products, and this is a sensitive topic for Modi and, frankly, for any other leader in India. And you might recall that several years ago, farmers went to the streets to protest against reforms that the government was trying to push through Parliament. And now with this trade deal, there's some who are concerned about the fate of Indian farmers. So this is Ajay Srivastava. He's a former Indian trade negotiator. He's a founder of a think tank here called the Global Trade Research Initiative, and this is how he put it to me.
AJAY SRIVASTAVA: Almost half of Indian population, their livelihood depends on the agriculture. They have small-size farms. If we allow the highly subsidized U.S. agriculture products, like wheat or rice, to come into India, their livelihood will be disturbed.
HADID: Now, when he says disturbed, what he means is destroyed by cheap imports.
SRIVASTAVA: There is no industry to absorb them. They will be on the streets, and they'll be dying of hunger.
HADID: So the commerce minister here says that India will protect its sensitive agricultural sector, but there is a very fine line in this country between sustenance and hunger.
KWONG HOST: There's been a lot of tension between these two nations, though it does look like Washington and New Delhi have improved their relations after months of tensions. Would you say that's the case?
HADID: So yeah, bilateral relations have been through a roller coaster since this second Trump administration. It's worth recalling that Trump and Modi were actually really friendly during Trump's first term.
KWONG HOST: Yeah.
HADID: They even held rallies for each other. But in this second term, that unraveled really quickly. Indians without legal authorization in the U.S. were deported in military planes in shackles and chains. And then Trump slapped 50% tariffs in August. He accused India of helping Russia with its war in Ukraine. So this deal does mean an improvement of ties, but analysts told us that it's unlikely that a warm relationship can be revived, like Chietigj Bajpaee. He's a senior research fellow for South Asia at the think tank Chatham House.
CHIETIGJ BAJPAEE: Indians are going to be far more cautious going forward in dealing with the U.S. under the Trump administration.
KWONG HOST: So in other words, the damage is done.
HADID: Yeah. And in fact, India seems to be doubling down on its efforts to shore up relations with other countries and trading blocs. India is basically hedging its bets. In January, it closed a trade deal with the EU. It had been in the works for years, but you get the sense that both sides wanted to get it done as quickly as possible because of the uncertainty in Washington. Many U.S. partners and allies are alarmed by recent events, and India is no exception.
KWONG HOST: That's NPR's Diaa Hadid in Mumbai. Thank you.
HADID: You're welcome.
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