Repairing the Breach

Executive Summary

U.S.-India relations stumbled badly during the second half of 2025. Differences between U.S. and Indian officials over how a ceasefire was reached between New Delhi and Islamabad on May 10, 2025, created a breach of trust, while President Donald Trump’s imposition of 50 percent tariffs on Indian exports in August 2025 led to a crisis in the relationship.

The February 6, 2026, announcement of the U.S.-India framework for an interim trade deal provides an opportunity for the two nations to get the relationship back on track.¹ This is important because India will play a key role in shaping the future of the Indo-Pacific region and has both the ambition and political will to help the United States compete more effectively against a rising China. The reduction in U.S.-India trade tensions will help unlock progress in other areas, such as energy, defense, technology, and maritime security, on which much groundwork has already been laid. However, reestablishing Indian trust in the relationship will take time, especially given the second Trump administration’s overtures to India’s archrival, Pakistan.

One area ripe for greater cooperation is critical minerals. Though still a nascent sector in India, particularly in mining, refining, and processing capacity, recent reforms signal New Delhi’s desire to move up the value chain. These include the passage of the Mines and Minerals (Development and Regulation) Amendment Act 2025 and a $4 billion investment in its National Critical Mineral Mission.² Together, these steps aim to shift India from exporting raw minerals to developing domestic refining and processing capabilities. This shift aligns closely with the objectives advanced at the 2026 Critical Minerals Ministerial, where the United States and its partners launched initiatives, such as the Forum on Resource Geostrategic Engagement, to build secure, diversified, end-to-end supply chains.³ These efforts position India to emerge as a trusted regional supplier of critical minerals and a credible alternative to China in rare-earth and strategic materials value chains.⁴

The United States and India have continued to advance their cooperation on defense and security, despite friction in the relationship. In October 2025, U.S. Secretary of Defense Pete Hegseth and Indian Defense Minister Rajnath Singh renewed the bilateral 10-year defense framework agreement, first signed in 2005 and once again in 2015, highlighting shared priorities and a deepening partnership in a number of areas, including operational coordination, information sharing, regional maritime cooperation, and defense industrial technology.⁵ Additionally, after signing an interim bilateral trade deal in February 2026, India confirmed it would purchase six additional Boeing P-8I maritime surveillance aircraft, negotiations which had been halted due to the imposition of tariffs in August 2025.⁶

Nonetheless, while economic, defense, and technology ties have been sustained during the last year of turbulence in the U.S.-India relationship, there remain fundamental differences between Washington and New Delhi when it comes to Pakistan and perceptions about its role in terrorism.⁷ Even though the U.S. State Department designated the Resistance Front—the group that claimed responsibility for the April 22, 2025, attack in Indian Kashmir that killed 26 civilians—as a Foreign Terrorist Organization and a Specially Designated Global Terrorist group, New Delhi has been disappointed by the overall lack of U.S. attention to the problem of terrorism that emanates from Pakistan.⁸

India will play a vital role in shaping the geopolitical landscape of the Indo-Pacific and it is critical that the United States arrests the downward slide in relations and renews strategic ties. To fully restore relations and revive trust, the United States should take the following actions.

Summary of Recommendations

Strengthen U.S.-India energy security through civil nuclear cooperation.

The United States and India should deepen energy security cooperation by leveraging reforms outlined in India’s recently passed Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act to expand civil nuclear engagement and accelerate the deployment of advanced nuclear technologies, including small modular reactors. Coordinated investment, regulatory alignment, joint research and development (R&D), and integrated fuel and technology supply chains would enhance resilience, support India’s 100 gigwatt (GW) nuclear target, and reinforce Indo-Pacific stability.

Institutionalize India’s Indian Ocean maritime security role within the Quad.

Washington can support India’s role as the lead maritime security provider in the Indian Ocean, particularly the western Indian Ocean, by encouraging India’s implementation and deployment of the Indo-Pacific Partnership for Maritime Domain Awareness initiative, which will deepen operational integration and burden-sharing arrangements within the Quad framework.

Leverage India’s central role in the Indian Ocean by assisting India in transforming strategic ports into integrated, resilient maritime hubs.

The United States should engage through the Development Finance Corporation to provide technical assistance, transparent financing mechanisms, and public-private partnership models that enhance port efficiency, digital infrastructure, and supply chain resilience.

Operationalize a U.S.-India pharmaceutical resiliency initiative.

To strengthen pharmaceutical supply chains and long-term health security, the United States and India should implement a pharmaceutical resiliency framework centered on dual-location production of active pharmaceutical ingredients and essential medicines, structured supply chain risk monitoring, and targeted regulatory streamlining to ensure stability, affordability, and uninterrupted access to critical drugs.

Advance biotechnology supply chains through R&D integration.

Beyond pharmaceutical resilience, U.S.-India biotechnology cooperation should prioritize joint research funding, translational science, and commercialization pathways that elevate India’s role in advanced biologics, genomics, and next-generation biomanufacturing, embedding it more fully in global biotechnology innovation ecosystems.

Reframe artificial intelligence and semiconductor cooperation around joint infrastructure.

With India’s data center demand, estimated at 5–17 GW by 2030, and with the United States already accounting for the bulk of its $80 billion in tech-related foreign direct investment, the partnership should prioritize jointly scaling the development of data centers and semiconductor infrastructure.⁹

Refrain from talking about mediating the India-Pakistan dispute over Kashmir.

Maintaining trust with India requires that the United States respects India’s strategic red lines. One of those is its opposition to any outside involvement in its dispute with Pakistan.

Reinvigorate the U.S.-India counterterrorism dialogue.

The State Department should elevate its counterterrorism dialogue with India, focusing on both regional and global terrorist threats. This kind of cooperation could help restore India’s trust and confidence that the United States takes terrorism threats in the region seriously.

Introduction

Despite the announcement of a trade deal between the United States and India on February 2, 2026, U.S.-India relations are likely to remain strained for the foreseeable future. Relations stumbled badly during the second half of 2025, turning Indian public opinion against the United States.¹⁰ This provided members of the Indian foreign policy establishment who are skeptical of the United States with fodder to make their case against getting too close to Washington and instead advocate for preserving India’s policy of strategic autonomy.

Troubled ties between New Delhi and Washington are problematic for broader U.S. strategy in the Indo-Pacific region, because India, with the fastest growing economy in the world, third-largest military, and largest population, will play a significant role in shaping the future of the region.¹¹ India also shares U.S. concerns about a rising China and its ambition to become the regional hegemon and stands poised to help the United States compete more effectively with China.

A major source of the relationship strain comes from trade tensions, particularly from August 2025 when President Donald Trump imposed 50 percent tariffs on Indian exports—25 percent in reciprocal tariffs and 25 percent to punish India for importing Russian oil—making India face one of the highest levels of U.S. tariffs in the world.¹² The trade deal announced in February reduces U.S. tariffs on India’s exports to 18 percent and includes a pledge by India to buy more U.S. goods.¹³ This will help assuage bilateral tensions to some degree, but relations are unlikely to return to the high points they had reached by the end of Trump’s first term in office in January 2021 and during President Joe Biden’s administration.

The breach of trust that occurred in the immediate aftermath of the May 2025 Indo-Pakistani conflict, when President Trump took credit for a ceasefire between New Delhi and Islamabad, is deep and will take time to repair. Indian officials contradicted Trump’s version of events, claiming instead that Pakistani military leaders requested a ceasefire following Indian bombardment of multiple Pakistani military bases in the early hours of May 10, 2025.¹⁴ Trump then welcomed Pakistani Field Marshal Asim Munir to the Oval Office in mid-June, following which the Pakistani government formally nominated President Trump for a Nobel Peace Prize.¹⁵ The visit of Pakistan’s top army official one month after a conflict that was precipitated by a terrorist attack on India, which New Delhi claims was sponsored by Pakistan, was met with anger and disbelief in India.

Despite the strains in the relationship during the past year, the two governments are continuing to work together on defense and technology initiatives, and U.S. companies are continuing to make large-scale investments in India, particularly in the artificial intelligence (AI) sector. While India still views the United States as its most important partner, it has reverted to hedging its bets by building closer ties to European and Middle Eastern countries, bolstering relations with Russia, and seeking greater accommodation with China.

This paper will discuss the tensions in the U.S.-India relationship during the past year, areas where cooperation continued amid the friction, and what the February 2026 interim trade deal means for future ties. The paper examines opportunities for greater U.S.-India cooperation in nuclear energy, critical minerals, and pharmaceuticals and assesses where the defense relationship and technology partnership are likely headed. It also notes that continuing differences between New Delhi and Washington over Pakistan will pose a challenge to deepening U.S.-India ties. Finally, it puts forth several policy recommendations for improving relations and expanding areas of mutually beneficial cooperation.