The U.S.-India Dynamics under the US-India Compact Initiative
The world has been skeptical towards the turbulent foreign policy of the United States after the return of Donald Trump at the Oval Office. Narendra Modi’s visit to the US in February 2025 was seen with cautionary eyes on how New Delhi will navigate its relationship with the United States. However, the erratic statements on the trade tariffs and the drastic foreign policy decisions indicate more uncertainty than ever before. This Article will focus on the major initiatives announced in February 2025, the new tariffs and unpredictable decisions in play and how it impacts the Defence Dynamics between the two countries.
What is the US-India COMPACT Initiative?
Announced in February 2025, the U.S.-India COMPACT (Catalysing Opportunities for Military Partnership, Accelerated Commerce, and Technology) Initiative represents a landmark agreement aimed at deepening bilateral ties between the United States and India. To be inaugurated by President Donald Trump and Prime Minister Narendra Modi, the COMPACT Initiative introduces a comprehensive framework to strengthen cooperation across defence, commerce, technology, energy, and regional security. This initiative signals a mutual aspiration to elevate U.S.-India relations, reflecting shared geopolitical objectives and reciprocal economic and technological ambitions in an evolving global order.
An essential element of the COMPACT Initiative is the promotion of military cooperation. This is reflected under the U.S.-India Major Defence Partnership (2025–2035) which aims on enhancing military interoperability and co-development of capabilities. Here, New Delhi will be involved in the co-production of "Javelin" Anti-tank guided missiles and "Stryker" infantry assault vehicles with the United States.
India will also procure six P-8I maritime reconnaissance aircraft for improving its surveillance operations in the Indian Ocean Region (IOR). The two nations have planned to review and streamline arms transfer procedures, in accordance with the International Traffic in Arms Regulations (ITAR) and in alignment with India's Strategic Trade Authorisation-1 (STA-1) status that permits transfers of technology as well as defence trade.
Additionally, the countries are scheduled to negotiate a Reciprocal Defence Procurement (RDP) Agreement, aimed at streamlining procurement systems and enabling mutual defence equipment and services provision. A significant development is the proposed Autonomous Capabilities Industry Alliance (ASIA), designed to foster collaboration in autonomous technologies, including AI-driven counter-drone systems and marine platforms. These initiatives collectively signify a pivot away from India’s historical dependence on traditional defence suppliers such as Russia.
The possibility of India acquiring F-35 stealth fighter jets has also been hinted at by President Trump, but not much discussions have taken place between the two parties as India have traditionally relied on Russia and in recent years with France for fighter jets
The Multiple Dimensions of COMPACT
Energy and Nuclear Cooperation:
Energy security is another critical area of collaboration under the COMPACT Initiative. The United States has pledged support for India’s full membership under the International Energy Agency(IEA). There were positive discussions on the development of American-designed nuclear reactors in India and mutual agreements on India’s adoption of amendments to the Atomic Energy Act of 1962 and Civil Liability for Nuclear Damage Act (CLNDA), allowing private sector participation in nuclear power projects.This shift could significantly contribute to India’s clean energy transition, reducing reliance on fossil fuels and supporting global climate change mitigation efforts.
Furthermore, the two nations have agreed to strengthen collaboration on Critical mineral supply chains, including the acquisition of rare earth elements vital for electric vehicles, renewable energy, and battery production, which aligns with the discovery of the same in Jammu and Kashmir.
Technological Collaboration:
The core of the U.S.-India technological partnership is the iCET (Initiative on Critical and Emerging Technology), which has developed from previous trust-building efforts and has been strengthened by the COMPACT (Critical and Emerging Technology, Maritime, and People-to-People Cooperation and Trade) Initiative. The core objective of these frameworks is to enhance collaboration in these industries, such as artificial intelligence (AI), semiconductors, quantum computing, biotechnology, clean energy, and space exploration.
One of the key concerns is the establishment of artificial intelligence infrastructure in India, backed by American assistance in the form of technology transfer and capital investment. The United States has been in the lead in efforts that have aimed at enhancing India's processing power, establishing data centers, and developing high-speed networking infrastructures, thereby establishing a sound technological base to compete with China's leadership in the digital arena. The recent sanction of over USD 2 million for collaborative research in artificial intelligence and quantum computing is reflective of the optimistic expectations behind this initiative.
Furthermore, the COMPACT Initiative has evolved from simple technology sharing to a more strategic approach focused on co-development. The United States has collaborated with Indian startups in the semiconductor industry, particularly in the development of a fabrication facility for defense-grade chips. This partnership signifies a growing confidence in India's homegrown expertise.
The origins of this collaboration can be linked to the Trump administration, which, even with its protectionist approach, recognised India as an essential strategic ally in its Indo-Pacific strategy. The Strategic Trade Authorization-1 (STA-1) status for India and the revocation of India’s GSP (Generalised System of Preferences) present a paradox. They facilitate technology transfers, yet simultaneously introduce trade friction. However, these decisions unintentionally encouraged India to develop self-reliant technology ecosystems (Swanson, 2023).
Regional Security and Geopolitical Alignment:
The COMPACT Initiative highlights a growing recognition of India's crucial security position in the Indo-Pacific region. This approach expands the defence frameworks established during the Trump administration, incorporating key agreements such as COMCASA, BECA, and LEMOA. These agreements have been instrumental in fostering intelligence sharing, enhancing logistical coordination, and ensuring secure communications. The support from the U.S. under COMPACT is playing a significant role in enhancing India’s maritime presence, particularly in vital chokepoints such as the Malacca Strait.
This development aligns with mutual strategic interests aimed at addressing Chinese naval assertiveness. Joint naval exercises, port access agreements, and interoperability initiatives have become standard components of the enhanced U.S.–India defence framework.India's strategic alignment has gained strength through the Quad alliance, comprising the United States, India, Japan, and Australia, which saw a revival during the Trump administration after a prolonged period of stagnation. The latest Quad Foreign Ministers’ Joint Statement reaffirmed the grouping’s commitment to maintaining the rules-based international order and safeguarding freedom of navigation in the South China Sea.
However, Trump's stance on burden sharing in the Indo-Pacific, especially for its QUAD counterparts has inadvertently strengthened India's strategic autonomy, a progression that the Biden administration has subsequently formalised through the COMPACT framework.
The unpredictability of the Trump administration occasionally raised diplomatic concerns, but it also served to enhance India's position as a significant defence partner for Europe as well as South East Asian countries like Indonesia and Thailand but compromised US’s legitimacy in South Asia, creating more in-roads for China in the long run.
Commercial and Economic Skepticism:
The economic dimension of the COMPACT Initiative is embodied in “Mission 500”, a bold target to quadruple bilateral trade to $500 billion by 2030. The mission emphasizes reducing trade barriers, expanding market access, and increasing investment in high-growth sectors like renewable energy, pharmaceuticals, and digital services. One of the major factors is the position of India as the largest global market in the world and the status of an alternate manufacturing hub for technological products with the likes of Samsung and Apple setting up their units in India.
However, with the new tariff announcements on the “Liberation Day”, India might re-evaluate on the trading opportunities with DC, with the government statements indicating about an “Exploration of Opportunities”, especially with the latest engagements with the delegation of the European Union in late February who see New Delhi as a core collaborator and leader of the Indo-Pacific, possibly indicating on deeper engagements with Europe in the future if the US doesn’t provide any respite on the harsh trade policies.
People-to-People Ties and Human Capital Flow:
The COMPACT Initiative recognises the essential role of human capital in sustaining a strategic partnership between the U.S. and India. This initiative encourages increased academic and professional mobility by implementing policies that support the mutual recognition of qualifications, streamline visa processes, and improve bilateral educational exchanges. The significance of this cannot be overstated, as the Fourth Industrial Revolution demands a workforce that is not only adept in technology but also capable of moving seamlessly across global landscapes. As of 2023, India emerges as the foremost contributor of international STEM students in the U.S., boasting over 268,000 Indian students enrolled in American educational institutions. The figure has experienced a significant doubling over the past decade, as noted in the Open Doors Report of 2023.
The Indian-American diaspora significantly impacts bilateral innovation ecosystems, particularly in sectors like healthcare, IT, research, and entrepreneurship. Within the framework of COMPACT, both nations have pledged their support for initiatives designed to create a sustainable talent pipeline, which encompasses:Research fellowships that foster collaboration in the fields of artificial intelligence, climate technology, and biotechnology. Collaborations at the university level under the U.S.-India Education and Skills Development Working Group, Enhanced procedures for Optional Practical Training (OPT) and H-1B visa applications.
Indian students and professionals face many challenges to achieve their “American Dream”, stemming from stringent Immigration policies which include strict and complex visa screenings, H1-B Visa backlogs, has led to deferral of job and admissions offers. This continues to extend beyond high living cost in tech hubs to unaffordable college tuition which entraps young individuals to loans and possibly illegal activities.
Some of them even switch to English-speaking countries like Australia, Canada, and the UK for higher education and employment. The recent deportation activities, online hate campaigns and racial violence have created more fear in the minds of Indian Immigrants.
Conclusion:
India should engage in this partnership with careful consideration, recognising both the potential behind the U.S.-India Compact Initiative and the unpredictable direction of US Foreign Policy.
The recent increases in trade tariffs and the inconsistent commitments from around the world—particularly regarding climate, trade, and multilateralism—highlight the potential instability that can arise even within the most earnest partnerships. Though the the strategic ten-year Major Defence Partnership suggest an increasing level of confidence and collaboration,
New Delhi should maintain its policy autonomy and safeguards its long-term strategic goals as well as ensure that Washigton doesn’t take a drastic stance on the unstable dynamics of its immediate backyard and bring back the historical distrust once again.
References:
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- Reuters. (2024, October 3). India, US sign pact to cooperate on critical battery mineral supply chains. https://www.reuters.com/markets/commodities/india-us-cooperate-critical-battery-minerals-trade-minister-says-2024-10-03/
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Pic Courtesy- AP
(The views expressed are those of the author and do not represent the views of CESCUBE.)
