Have ties between India and the United States reached a breaking point? Where do they go from here? These and many other questions are being intensely debated following the U.S.’s announcement on October 8 that it had suspended the Permanent Labour Certification (PERM) programme for eight global IT companies, including some Indian-headquartered companies, accusing them of misusing immigration and labour-certification systems. The Indian companies named were Infosys, Tata Consultancy Services, Wipro, Cognizant and HCL.
The PERM programme allows tech companies to hire non-U.S. professionals to work in the U.S. and is a step in a employer-sponsored green-card application. According to the U.S. government, the companies had received more than 2,30,000 H-1B visa approvals and over 1,00,000 permanent labour certifications since 2009. Indian professionals account for more than 70% of approved H-1B petitions annually.
This episode, however, is not an isolated incident but part of a series of actions and decisions taken by the U.S. in recent years, including the ill-treatment of Indians and racist attacks against them that are placing bilateral ties under severe strain.
Trade ties, visible discord
Trade has emerged as a visible source of discord and asymmetry for three main reasons. First, India recorded a trade surplus of $33.8 billion in bilateral trade exceeding $140 billion in FY 2025-26. Second, the U.S. is seeking access to India’s dairy and agriculture sectors in ongoing trade negotiations, which India cannot afford to concede. Third, India has refused to halt Russian oil imports despite additional U.S. tariffs and sanctions.
Despite a framework for an interim agreement on reciprocal and mutually beneficial trade announced in February 2026, the strain in trade ties persists. Last week, Finance Minister Nirmala Sitharaman said that trade talk negotiations had “plateaued”, with little scope for give-and-take.
Defence and security cooperation has emerged as a key pillar of relations. Over the past two decades, India and the U.S. have expanded military exercises, logistics arrangements and intelligence-sharing. American weapons platforms have also become increasingly important to India’s military modernisation.
Since 2002, India has acquired over $22 billion worth of American military hardware, but meaningful co-production and technology transfer remain elusive. During Prime Minister Narendra Modi’s visit to Washington in February 2025, the U.S. agreed to expand defence sales and co-production in India, including Javelin anti-tank guided missiles and Stryker infantry combat vehicles. The two countries subsequently signed a 10-year Framework for the U.S.-India Major Defence Partnership on October 31, 2025.
However, a strategic defence partnership of this magnitude must be assessed by what it delivers, not merely the number of agreements signed. Prolonged delays in the supply of GE F404 engines for India’s Tejas fighter aircraft highlight the risks of relying on foreign suppliers for critical military components and the strategic cost of supply-chain vulnerabilities. Despite initiatives such as the India-U.S. Defence Acceleration Ecosystem (INDUS-X), launched in 2023, co-development and technology transfer remain an issue.
The Pakistan factor
Pakistan has always been a politically sensitive source of friction between India and the U.S., particularly since Operation Sindoor (May 2025). U.S. President Donald Trump’s repeated claims that he ended the conflict have irked India, although New Delhi has refrained from direct confrontation. The U.S.’s courting of Pakistan’s top leadership, especially its Chief of Defence Forces, Asim Munir, has also been a major irritant. The signing of the Mecca Pact between Saudi Arabia, Pakistan and Türkiye, reportedly with Washington’s blessings, has raised further security concerns for India.
High-end technology is another area in which India has often been forced to look to the U.S. — a situation that Washington has sought to exploit. Although the 2008 India-U.S. civil nuclear agreement was a historic breakthrough, its commercial promise of American-designed nuclear reactors in India remains largely unrealised. The Initiative on Critical and Emerging Technology (iCET), launched in 2023, was cited as an attempt to deepen cooperation in artificial intelligence, semiconductors, defence innovation, space and other advanced technologies, but much remains on paper. The India-U.S. Transforming the Relationship Utilizing Strategic Technology (TRUST) Initiative, signed on February 13, 2025, also raised hopes of greater technology transfer and integration. The key challenge, however, remains translating declarations into measurable outcomes.
Need for mutual respect
India-U.S. relations are entering a phase in which India’s strategic restraint and efforts at accommodation are increasingly met with American pressure, unilateralism and outright disregard for India’s strategic interests. Whether this is a difficult phase or a deeper structural problem remains to be seen. The relationship between the world’s oldest democracy and the world’s largest democracy can flourish only through equality, respect and trust, not unilateral imposition of will. External Affairs Minister S. Jaishankar’s recent observation that the U.S. is “deliberately becoming a lonelier power” may convey more than what the words suggest.
Rajeev Agarwal is a retired colonel and a strategic affairs expert. He is the author of the book, ‘Between Tehran and Tel Aviv – Gaza’s Story of Unending War’