On Feb. 2, Indian Prime Minister Narendra Modi posted on X that after speaking with his “dear friend President Trump,” Indian goods imported by the United States would now enjoy a reduced tariff of 18 percent. U.S. President Donald Trump was similarly warm in his follow-up social media post, writing, “out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India.” The president added that Modi was one of his “greatest friends.”
The broad contours of a deal were discussed on a phone call between the two leaders on Jan. 27. A joint statement was published on Feb. 6. A White House fact sheet authored by the Trump administration alone was published a few days later. Even now, the terms of the “deal” are being debated within India. Details are still being clarified; naysayers argue that the United States has essentially arm-twisted India into deprioritizing its relations with Russia.
On Feb. 2, Indian Prime Minister Narendra Modi posted on X that after speaking with his “dear friend President Trump,” Indian goods imported by the United States would now enjoy a reduced tariff of 18 percent. U.S. President Donald Trump was similarly warm in his follow-up social media post, writing, “out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India.” The president added that Modi was one of his “greatest friends.”
The broad contours of a deal were discussed on a phone call between the two leaders on Jan. 27. A joint statement was published on Feb. 6. A White House fact sheet authored by the Trump administration alone was published a few days later. Even now, the terms of the “deal” are being debated within India. Details are still being clarified; naysayers argue that the United States has essentially arm-twisted India into deprioritizing its relations with Russia.
Nonetheless, what is clear is that the announcement of a deal has finally opened the pathway to recalibrate and open opportunities to deepen relations between the world’s two largest democracies. The wheels had all but come off the India-U.S. relationship only a few months earlier. Disagreements over tariffs, Russian oil, and Trump’s insistence on being given due acknowledgement for apparently ending a war between India and Pakistan in the summer of 2025 had frozen principal-level engagements.
It’s true that the future of this relationship will look less like the past. The Trump administration’s heavy-handed advances, including berating India publicly nearly every day for months on end, has chipped away hard-won trust. It took decades to transform the India-U.S. relationship. From here on, Indian leaders and negotiators will remain ever more cautious of American policies. Skeptics of the relationship, of which there are many, have been provided with a stronger voice. Determined realignment is the order of the day.
The conclusion of a free trade agreement with the European Union on Jan. 27—the same day that Modi and Trump spoke on the phone—can partially be ascribed to the verve for realignment in India’s strategic priorities. Arguably, diversification has been an advance mastered by Indian leaders for several decades. The United States will continue to be one of India’s most important strategic partners, but it will not, for some time to come, serve as the crucial relationship for Indian leaders.
Yet there is an aspect of this relationship that has strengthened in this trying time. Outside the universe of officialdom between Washington and New Delhi, the links between California and India grew stronger. Technology ties, curiously, remained largely immune from the principal-level freeze between the end of the India-Pakistan conflict in May 2025 and the Modi-Trump call in January 2026. These strengthened ties will be on full display at the India AI Impact Summit being held in New Delhi this week.
This week’s summit will be the fourth in a global series that started at Bletchley Park in the United Kingdom in November 2023. Almost every U.S. technology giant—including Dario Amodei (Anthropic); Sam Altman (OpenAI); and the 29-year-old artificial intelligence boss at Meta, Alexander Wang—will be in New Delhi for the event. Top executives from Microsoft, Micron, Adobe, Cognizant, and Kyndryl, as well as CEO Sundar Pichai from Google, are confirmed to speak at the Impact Summit. AI guru Yann LeCun, formerly with Meta, who is creating a “world model”—a type of AI model that is supposed to more accurately reflect real-world situations—will travel too. They will be joined by counterparts from across the world. But U.S. mavericks dominate the agenda in the main plenary of the summit.
Their travel plans predate the January Modi-Trump call. These tech tsars were not waiting for a trade deal, although that is, of course, welcome news. For them and their firms, India is a top location to setup data centers, sell chips and enterprise solutions, and try to tap into a growing market for frontier models.
Anthropic set up operations in India at the end of 2025, which will be the company’s second such office in the entire Indo-Pacific region. OpenAI powers a chatbot designed to engage with Indian farmers. Claude Code, an AI programming assistant, is increasingly the favored tool for developers across the country. Google works with Indian researchers and scientists. Microsoft’s cloud infrastructure is being used to connect workers to welfare programs in India.
In August 2025, India’s Reliance Group, one of the largest conglomerates in the world, announced AI partnerships with both Google and Meta. Two months later, Google entered into a $15 billion partnership with the Adani Group, another outsized Indian conglomerate, to build data centers over the next five years. Sify Technologies, an Indian firm is partnering with Meta to provide landing services in southern India for a 50,000 kilometer-long undersea cable. In December, Microsoft CEO Satya Nadella was in New Delhi. He met the Indian prime minister and announced a $17.5 billion investment in India, including for cloud and AI infrastructure. It is Microsoft’s largest investment in Asia.
Just as these partnerships were being inked, the political relationship between the United States and India was tearing at the seams. In August 2025, Peter Navarro, Trump’s trade advisor, wrote an article in the Financial Timestitled “India’s oil lobby is funding Putin’s war machine.”
The reaction in India was predictably intense. Referring to big U.S. investments into India, Navarro went on to claim that Americans were “paying for AI in India.” In September, following Modi’s visit to China for the Shanghai Cooperation Organisation summit, Trump stated that the United States had “lost” India to China. In October, Trump claimed that he had stopped the war between India and Pakistan in May that year after he threatened both countries with 250 percent tariffs.
It was not till the end of 2025 that there was a sense among experts in India that Trump might finally agree to a trade agreement. But nothing was certain. Still, the ambiguity did not deter the United States’ technology titans.
What has helped mobilize the big investments is a degree of confidence among major technology companies that India will remain largely China-free in its AI build-out. This was the also kind of encouragement that was needed by the officials who wrote “America’s AI Action Plan.” The aim is simple: to win the AI race. To do so, it was imperative, as the last section of the action plan document made clear, to “meet global demand for AI by exporting its full AI technology stack—hardware, models, software, applications, and standards.”
“Diffusion” is the name of the game—diffusing U.S. technology to “allies” who could otherwise become dependent on “foreign adversary technology.” This was code for China.
Given India’s precarious relationship with China, those on the inside in the White House remain confident that the U.S. stack could win in India. And to an extent, it has. As the investments outlined above suggest, India is a vital part of the U.S. AI ecosystem. It is the reason why hundreds of American CEOs and almost all major tech leaders from Seattle to San Francisco are in India for the AI Impact Summit. It is also the reason why these large firms invested in India despite the Trump administration taking a wrecking ball to this important relationship. And no doubt, the announcement of a trade deal has given everyone some breathing space.
For these reasons, India is also well placed to join Pax Silica—a U.S. State Department initiative focused “on AI and supply chain security” that is designed to advance a “new economic security consensus among allies and trusted partners.” In all likelihood, Indian involvement in Pax Silica will be shaped by a carefully negotiated joint statement that gives India enough room to maneuver around any awkward obligations. If signed at the summit, it will provide a light political framework to investments that were made without the need for outright political consent.
Nonetheless, two points are worth keeping in mind. First, data center investments in India work well for the needs of U.S. companies that are running out of global and trusted real estate. But these bets also incrementally increase India’s leverage over U.S. technology firms.
Second, Indian developers, investors, conglomerates, and enterprise firms appear comfortable using parts of the U.S. stack that are available in India, but only as long as they can exercise a degree of optionality. For India’s titans, large language models (LLMs) are likely to be commoditized over time. Building LLMs is not the focus for them or the Indian government. The payoff is increasingly unclear, too. For specific tasks, “sovereign” and smaller models developed by Indian start-ups will give ChatGPT and Google’s Gemini a run for their money. There is some evidence that in certain sectors, this is already happening. Several applications at scale are also built upon open weight and open-source LLMs offered by U.S. firms.
In sum, no matter which way the balance goes between sovereign build-outs and the LLMs trained by the likes of Anthropic and OpenAI, the India-U.S. AI story continues to expand. And so far, at least, the relationship has proved to be largely immune from high-level political disruptions.
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