Difficult for India to trust US, says Raghuram Rajan: 'Can't be most tariffed nation, then talk military'

In the last few weeks, the negotiations between US and Indian government officials have increased, with both sides keen an early conclusion of a trade agreement.

Raghuram Rajan, former Reserve Bank of India governor, believes that the recent strain in the bilateral ties between India and the US, triggered by Washington’s tariff policies, will have a long-term impact on the relationship between the two nations.

Both nations will most likely “figure out” a trade deal, but military ties and economic pain trigged by tariffs can’t go parallelly, the economist said.

“I think it's one of those things where they will figure out an agreement. It can't be that you (India) are the most tariffed country in the world, more than China, and you know you talk about military friendship and alignments and join manoeuvre and so on. So, I think they have come to an accommodation. But i think these kinds of actions stay long at people's minds. The US cannot be trusted,” he said during an event hosted be Chicago Council on Global Affairs.

US President Donald Trump had imposed a 50 percent tariffs on Indian goods, including a 25 percent penalty for the purchase of Russian crude oil. India had described the US action as "unfair, unjustified and unreasonable".

Between May and September, the Indian shipments to the US plunged 37.5 percent. In September, which was the first full month of 50 percent tariffs, saw exports fall over 20 percent to $5.5 billion.

In the last few weeks, the negotiations between US and Indian government officials have increased, with both sides keen an early conclusion of a trade agreement.

Trump’s tariff storm hits Americans’ wallets, and India’s exports, but New Delhi’s diversification push is beginning to pay off

Trump has also been claiming for the past few days that Delhi has assured him that it will significantly reduce its oil imports from Russia.

However, India has been maintaining that its energy policy is guided by its own national interest, especially ensuring affordable and secure supplies for its consumers.

With agency inputs