As India moves towards finalizing a $248 million deal with Russia to modernize its aging fleet of T-72 tanks, the United States is amplifying its efforts to reshape the trade and defense relationship with India. U.S. Commerce Secretary Howard Lutnick, in an interview with India Today on March 7, encouraged India to reduce its tariffs and transition its defense acquisitions from Russian sources to American suppliers in order to facilitate a significant bilateral agreement. The Indian defense ministry has confirmed that the contract with the Russian arms exporter Rosoboronexport will enhance 2,500 T-72 tanks by equipping them with new 1,000 HP engines, thereby boosting their operational mobility on the battlefield. This agreement also encompasses a technology transfer to India’s state-owned Armoured Vehicles Nigam Ltd. However, India’s historical dependence on Russian military equipment has been challenged by disruptions in supply commitments due to Moscow’s ongoing conflict in Ukraine. Lutnick’s comments coincide with Washington’s plans to introduce reciprocal tariffs in April, which would affect Indian exports across various sectors. He identified India’s average tariff rate of 12%—one of the highest in the world—as a barrier to strengthening economic relations. Lutnick expressed a desire to reduce India’s tariffs to nearly zero, with the exception of agricultural products, while urging India to liberalize its market and negotiate protective quotas for sensitive industries.
The defense sector remains a significant point of contention, with Lutnick explicitly urging India to reduce its reliance on Russian defense imports. He highlighted the U.S. readiness to provide advanced military equipment, including F-35 fighter jets. Since 2008, India has invested over $20 billion in U.S. defense products, yet the Biden administration is seeking to deepen this alignment further. As Indian Trade Minister Piyush Goyal visits the U.S. for a week, there is increasing pressure for India to realign its defense procurement and trade policies in response to these developments.
