Washington/New Delhi, January 9, 2026 – In a bombshell revelation that has sent ripples through global trade corridors, US Commerce Secretary Howard Lutnick claimed Friday that a much-anticipated bilateral trade agreement with India fell apart last year primarily because Prime Minister Narendra Modi declined to place a courtesy call to President Donald Trump to seal the deal. The candid admission, made during a high-profile podcast interview, underscores the personal diplomacy at the heart of high-stakes negotiations and exposes simmering frictions in the world's largest democracies' economic ties, already strained by tariffs and geopolitical divergences.
Speaking on the All-In Podcast – a Silicon Valley staple hosted by venture capitalists Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg – Lutnick, a longtime Trump ally and Wall Street veteran tapped as commerce chief in the president's second term, laid bare the behind-the-scenes drama. "I set the deal up. But you had to have Modi call President Trump. They [India] were uncomfortable doing it. So Modi didn't call," Lutnick stated bluntly, framing the oversight as a critical misstep that derailed months of groundwork. He elaborated on the timeline, revealing how the US, assuming India's pact would materialize first, inked superior agreements with Southeast Asian nations like Indonesia, the Philippines, and Vietnam at "higher rates." When India circled back weeks later, Lutnick quipped, "The train left the station three weeks ago," adding that Washington had "stepped back from that trade deal that we had agreed to earlier. We are not thinking about it anymore."
The disclosure arrives amid heightened US-India trade tensions, exacerbated by Trump's aggressive tariff regime. In August 2025, the administration hiked duties on Indian imports to 50% – the world's steepest – citing New Delhi's purchases of discounted Russian crude oil amid the Ukraine conflict, a move Trump publicly decried as undermining Western sanctions. The escalation followed six rounds of bilateral talks launched in February 2025, aimed at ballooning two-way trade from $191 billion to $500 billion by 2030. The envisioned "first tranche" pact, slated for closure by fall 2025, sought to dismantle barriers on US agricultural exports like almonds, corn, and apples, while granting Indian goods deeper access to American markets – a boon for exporters in textiles, pharmaceuticals, and IT services, which constitute 18% of India's outbound shipments.
Yet, India has dug in its heels, staunchly refusing concessions in sensitive agri-dairy sectors to shield millions of small farmers and micro, small, and medium enterprises (MSMEs) – cornerstones of its rural economy. The latest negotiation round wrapped on December 11, 2025, in New Delhi, with US Deputy Trade Representative Rick Switzer pushing for breakthroughs, but no final accord emerged. Despite the impasse, trade volumes have held resilient: India's exports to the US surged 22.61% to $6.98 billion in November 2025, rebounding from prior dips, while bilateral merchandise trade hit $131.84 billion in FY 2024-25, with the US retaining its spot as India's top partner for the fourth straight year.
Lutnick's remarks, delivered just days after Trump greenlit a bipartisan Russia Sanctions Bill granting sweeping powers to slap 500% tariffs on nations buying Russian energy, amplify the stakes. The legislation, spearheaded by Senators Lindsey Graham and Richard Blumenthal, targets enablers of Moscow's war machine, with India – a voracious importer of Russian oil at discounted rates – squarely in the crosshairs. Trump, addressing reporters Sunday, hinted at swift reprisals: "Modi knows I'm unhappy with the Russian oil... We could raise tariffs on New Delhi very quickly." A pending US Supreme Court ruling on the tariffs' legality could force $150 billion in refunds to importers if deemed unlawful, injecting further uncertainty.
The Indian government has maintained radio silence on Lutnick's podcast bombshell, with no official rebuttal as of press time. Commerce Secretary Rajesh Agrawal's most recent comments, from December 23, 2025, struck an optimistic tone: "India is actively engaged... and hopes to conclude the talks sooner than later" to revive market access for exporters battered by duties. Behind closed doors, sources in New Delhi suggest the "uncomfortable" dynamic stemmed from Modi's aversion to perceived subservience – a hallmark of his "strategic autonomy" doctrine – especially amid Trump's "America First" saber-rattling.
Social media, however, erupted with a nationalist fervor, framing the non-call as a badge of sovereignty rather than a blunder. BJP supporters and online influencers hailed it as "proof India didn't bow down," with viral clips of Lutnick's interview captioned: "Modi refuses to dial Trump – 4D chess!" One prominent X post by journalist Sidhant Sibal garnered over 4,700 likes: "US Commerce Secretary Lutnick says India, US trade deal did not happen because 'Modi didn't call the President' – India REFUSES to BOW DOWN." Another user quipped: "Trump bhakts thought Modi was pleading; nah, peak boss moves." Critics, including opposition voices, decried the episode as diplomatic malpractice, warning of economic fallout for exporters.
Analysts view Lutnick's candor as a negotiating ploy, leveraging Trump's cult of personality to extract concessions. "Trade deals under Trump aren't just economic; they're ego-driven," observed Brookings Institution fellow Tanvi Madan. "Modi's team likely saw the call as a concession in itself – better to renegotiate from strength." As the US pivots to Asia-Pacific pacts, India faces a crossroads: concede on Russian oil and agri duties for tariff relief, or double down on diversification, eyeing alternatives like the EU and ASEAN.
For now, the "missed call" symbolizes more than a stalled deal – it's a litmus test for the Modi-Trump bromance, once buoyed by "Howdy Modi" rallies, now tested by tariffs and realpolitik. With bilateral trade volumes defying headwinds, the pact's resurrection hinges on whether Delhi dials up – or if Washington sweetens the pot anew. As Lutnick put it: "India still seeks a tariff rate between [offers to] Britain and Vietnam... but the offer has expired." In the high-wire world of global commerce, one unmade call could echo for years.
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