Washington: A senior US official has revealed that a potential bilateral trade agreement between India and the United States fell apart last year because Prime Minister Narendra Modi did not place a crucial phone call to then-President Donald Trump. This claim, made by US Commerce Secretary Howard Lutnick, offers a starkly different perspective from New Delhi's official stance, which blames Washington's tough demands.
The "Staircase" Model and India's Missed Call
In a recent podcast interview, Lutnick detailed the Trump administration's unique approach to trade talks, which he termed the "staircase" model. Under this strategy, the first country to seal a deal receives the most favourable terms. Each subsequent agreement becomes progressively tougher, moving "up and to the right" in terms of higher tariffs and stricter market-access conditions.
Lutnick stated that the United Kingdom, under then-Prime Minister Keir Starmer, acted with urgency when given a tight deadline of "two Fridays." Starmer personally called Trump to finalise the agreement. India, however, was given a longer countdown timer of "three Fridays." Lutnick explicitly advised Indian officials that "you've got to have Modi call the president." He recounted that the Indian side was "uncomfortable" with this, and the call from the Prime Minister never came. As the deadline lapsed, the US administration moved its focus elsewhere.
India's Stance: Unacceptable Demands on Farm and Dairy
The Indian government has consistently maintained a different narrative for the collapse of the trade talks. Officials in New Delhi have pointed to the Trump administration's insistence on lowering tariffs on sensitive agricultural and dairy products and allowing genetically modified (GM) products into the Indian market. These areas are considered political "no-go zones" for the government, given the importance of the farming sector.
With India refusing to agree to these terms, the US retaliated by imposing a 50% tariff on certain Indian goods, citing India's imports of Russian oil and defence equipment. Washington has also been unresponsive to fresh proposals shared by India since then.
When questioned about the US President signing a bill that allows for tariffs as high as 500% on nations importing Russian oil, the Ministry of External Affairs reiterated that India's energy policy is shaped by market dynamics and the need to secure supplies from diverse sources to meet its requirements.
The Aftermath: A More Expensive Staircase
Following the window with India, the US swiftly announced a series of trade agreements with other Asian nations, including Indonesia, the Philippines, and Vietnam. Lutnick explained that these deals were negotiated at "higher tariff and market-access levels" than what was initially offered to India, because the "staircase" had already moved upward.
When Indian negotiators later re-engaged, they were seeking terms comparable to the UK deal, effectively asking for an agreement "in between the UK and Vietnam." Lutnick's response was blunt: "Then - not now." The opportunity had passed, and the terms were no longer on the table.
Lutnick used a vivid metaphor from his trading days to describe India's position, likening it to being stuck on the wrong side of a seesaw where every move worsens the situation. He suggested the breakdown was not due to hostility but misaligned timing and domestic political constraints in India. However, he emphasised the Trump administration's impatience: "There are a lot of countries... But the train doesn't wait."
Despite the pointed remarks, Lutnick expressed confidence that the US and India would eventually "work it out," though any future deal would be on less favourable terms. Trump himself has previously called PM Modi a "great guy" and a "good friend," indicating the rift is strategic, not personal. This episode highlights a fundamental shift in US trade policy under Trump, prioritising speed and leverage over prolonged diplomatic negotiations.
