Trump’s tariffs, penalties cast shadow on India-US tech ties

US President Donald Trump’s imposition of new tariffs on India, along with unspecified penalties for ties with Russia, has cast a shadow over critical technology collaborations between New Delhi and Washington.

Before Trump’s outburst, India-US ties were focused on strategic collaboration, joint ventures and the transfer of critical technologies. India’s current and future technology needs are closely intertwined with the US — ranging from fighter jet engines and semiconductors to artificial intelligence (AI), pharmaceuticals and critical minerals.

On Wednesday, US President Donald Trump announced a 25 per cent tariff on Indian imports, coupled with penalties over India’s purchase of Russian oil and defence equipment. The move comes just months after a bilateral meeting between Prime Minister Narendra Modi and Trump that had promised to elevate the strategic partnership to new levels of cooperation.

That February meeting was followed by a detailed joint statement outlining collaboration in defence, trade, energy and technology. The leaders also launched the US-India TRUST initiative (Transforming the Relationship Utilising Strategic Technology). The first Track 1.5 dialogue under TRUST was held in March in India.

One of the most critical defence collaborations under TRUST is the joint production of the GE F-414 jet engine in India — a significant step beyond the current supply of F-404 engines for the Tejas Mark 1A fighter aircraft. The F-414 programme, involving technology transfer, is expected to define India’s military-strategic capabilities for decades, with over 800 engines planned for manufacture.

A central pillar of TRUST is the AI roadmap, which envisions building next-generation data centres, enhancing processor access and fostering industry partnerships. Vice-President JD Vance discussed the roadmap during his April visit to India. The AI roadmap was expected to be clearly defined by the time India hosts the Quad Leaders’ Summit in the last quarter of 2025. However, following Trump’s latest actions, a senior official warned the summit could now turn “icy”.

In semiconductors, a March 2023 MoU created a framework aligning India’s semiconductor mission with the US CHIPS and Science Act. This has led to major investments from US tech companies. Micron Technology has set up a semiconductor assembly and test facility in Sanand, Gujarat;

Applied Materials has committed $2 billion to develop engineering capabilities in India and Lam Research has announced a $1.2 billion investment to support semiconductor manufacturing tools.

On pharmaceuticals, the US is encouraging Indian companies to invest and expand their manufacturing presence stateside, aiming to reduce dependence on China, the world’s largest supplier of active pharmaceutical ingredients (APIs).

India is also part of a US-led 14-country initiative focused on critical minerals, vital for electronics, EVs and digital infrastructure.