New Delhi: India and the United States appear to be moving past one of the more difficult phases in their relationship. After a period marked by tariff disputes, political friction and uncertainty over Washington’s approach towards New Delhi, engagement between the two countries has once again become more constructive, particularly in defence and at the working level. However, the improvement remains fragile, with three major issues likely to determine whether the latest reset develops into a durable strategic partnership.
The relationship has considerable momentum behind it. India and the US have signed a new 10-year defence framework, while discussions and sales involving American defence equipment, including Javelin anti-tank missiles, are moving forward. At the same time, Indian exports to the US increased by 5.5% to nearly $60 billion during the first nine months of financial year 2025-26, underlining the importance of the American market to India's economy.
Yet the current improvement does not mean that the underlying disagreements have disappeared. New Delhi continues to watch Washington carefully, particularly because the Trump administration's broader policy toward India remains difficult to predict. A major concern is whether Washington sees India primarily as a strategic partner or increasingly as an economic competitor.
1. Russia and Iran sanctions could become a major hurdle
The first and potentially most serious challenge comes from US legislation targeting countries that continue significant economic relations with Russia.
A bipartisan Russia and Iran sanctions bill has gained substantial support in Washington. The proposed legislation includes the possibility of imposing 100% tariffs on the five largest buyers of Russian oil, putting India among the countries that could face serious economic consequences if the measure becomes law and is implemented against New Delhi. The bill has already passed the US Senate by an 86-11 vote but still requires consideration in the House before it could reach the president.
For India, the issue is particularly sensitive because Russian energy remains an important component of its economic and strategic calculations. New Delhi has consistently argued that its energy purchases are driven by national economic interests and the need to secure affordable supplies.
The legislation therefore creates a fundamental tension. Washington wants to increase pressure on Moscow, while India wants to preserve its ability to maintain relations with Russia. If the US were to impose severe secondary tariffs or sanctions on Indian businesses, it could once again push bilateral ties into confrontation.
At the same time, the legislation may not automatically translate into immediate action. The measure would also have significant implications for China, the largest buyer among the countries targeted, and could create a much broader economic confrontation. That gives the White House reasons to consider carefully how aggressively to use the proposed sanctions mechanism.
2. FCRA has become a sensitive political issue
The second test involves India's Foreign Contribution (Regulation) Act, or FCRA.
The legislation has attracted criticism from sections of the US political establishment, including both Republicans and Democrats. Critics have raised concerns about the impact of India's rules governing foreign funding for civil society organisations and religious groups.
The Indian government has responded by sending the controversial legislation to a joint parliamentary committee for further consideration. This creates an opportunity for the government to address concerns while retaining its broader regulatory objectives.
The disagreement is significant because it touches a sensitive area of sovereignty and domestic policymaking. India maintains that foreign funding must be regulated to protect transparency and national interests. The United States, meanwhile, has political constituencies that closely monitor issues involving religious freedom, civil society and foreign-funded organisations.
India's ambassador to the US, Vinay Kwatra, has also sought to challenge what he described as misconceptions surrounding the FCRA, arguing that foreign funding for registered organisations has continued to increase and that additional safeguards exist for religious institutions.
The dispute could therefore become less about the technical provisions of the law and more about domestic politics in both countries. If Washington increases pressure on the issue, New Delhi is unlikely to welcome what it could view as interference in India's internal regulatory framework.
3. BRICS could test Trump's patience
The third challenge may be the most visible: the upcoming BRICS summit in New Delhi.
India's position within BRICS has long reflected its strategy of maintaining multiple strategic relationships rather than aligning exclusively with one major power. But the grouping has become a particular source of concern for President Donald Trump, who has repeatedly viewed BRICS through the lens of US economic and geopolitical influence.
The presence of leaders such as Russian President Vladimir Putin, Chinese President Xi Jinping and Iranian President Masoud Pezeshkian alongside Prime Minister Narendra Modi in Delhi could therefore create an uncomfortable political picture for Washington.
For India, however, participating actively in BRICS is consistent with its long-standing foreign policy of strategic autonomy. New Delhi is unlikely to abandon an important multilateral grouping simply to accommodate US preferences.
That creates a delicate balancing act. India wants stronger ties with Washington while simultaneously maintaining its relationships with Moscow, Beijing and Tehran.
The challenge will be to ensure that India's BRICS diplomacy is not interpreted in Washington as an attempt to undermine American interests.
Defence and trade provide a strong foundation
Despite these challenges, the India-US relationship has substantial structural strength.
Defence cooperation has expanded significantly over the past decade, and the new 10-year framework provides another mechanism for long-term collaboration. The two countries increasingly cooperate on military technology, exercises, intelligence and Indo-Pacific security.
Economic ties are another important stabilising factor. The rise in Indian exports to the US demonstrates the depth of the commercial relationship, even after the tariff tensions that damaged confidence between the two sides.
The United States also remains strategically important to India's efforts to strengthen its position in the Indo-Pacific and manage the broader challenge posed by China's economic and military rise. At the same time, India provides Washington with an important partner in a region where American policymakers want stronger cooperation with major democratic powers.
The bigger question is trust
The immediate question for both governments is no longer simply whether relations can improve. It is whether the improvement can survive disagreements.
India wants a relationship in which Washington respects its strategic autonomy, including its ties with Russia and its participation in groups such as BRICS. The US, meanwhile, wants India to become a more reliable strategic and economic partner while remaining responsive to American concerns over trade, sanctions and geopolitical competition.
That difference in expectations means that another period of tension cannot be ruled out.
The current reset should therefore be viewed as an opportunity rather than a final settlement. Defence cooperation, growing trade and shared concerns about the Indo-Pacific provide a strong foundation, but the Russia-Iran sanctions legislation, the FCRA dispute and the BRICS summit could each expose the limits of the renewed partnership.
If New Delhi and Washington can manage these three issues without allowing disagreements to spill into the wider relationship, the latest improvement could become a more durable phase in India-US ties. If they fail, the relationship could once again become vulnerable to the kind of political and economic shocks that strained it in the recent past.
For now, both sides appear to have decided that cooperation is more valuable than confrontation. The coming months will show whether that calculation can withstand the pressure of competing interests.
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