India Watches US Midterms for Trade Policy Clarity

Indian officials and former diplomats say the more important question is continuity. “We should look at it with some amount of equanimity. No reason to go overboard in either direction,” one person familiar with the thinking said. The calculus is that the strategic convergence between the two countries — from the Quad to supply-chain diversification and diaspora links — is broad enough to outlast electoral shifts.

For investors, the practical issue is whether the new balance in Washington makes room for a more predictable economic relationship. India remains exposed to US scrutiny over Russian oil imports, and any hardening of congressional sentiment could complicate energy procurement and broader trade talks. That is especially relevant after the Trump administration repeatedly threatened tariffs on India over Russian oil purchases, including a law that opened the door to levies of as much as 100% before a waiver was granted last month.

Those episodes underscore why the relationship matters beyond diplomacy. India needs access to affordable energy and a workable trade framework; Washington wants leverage over Russia, better market access and closer strategic alignment with a key Indo-Pacific partner. The Biden administration previously allowed India to keep buying Russian oil to help stabilize global energy markets, showing how US policy can swing between pressure and pragmatism depending on the political moment.

The market backdrop reflects the same tension. Indian assets have been buffeted by fears over US tariff policy and slower trade progress, even as broader risk appetite has improved at times on hopes of warmer ties. The iShares MSCI India ETF, INDA, has recovered to about $50.89 from an October low near $45.56, but it remains below both its 50-day and 200-day moving averages, with the technical picture still volatile. That suggests investors have not fully priced in a durable easing of bilateral risk.

The bigger narrative is that India is trying to preserve a structural relationship with the US while managing tactical friction under the Trump administration. The midterm outcome may not change the fundamentals, but it could shape how much room India has to negotiate on trade, visas and energy without triggering fresh political pushback in Washington.

For now, New Delhi’s message is restraint rather than alarm. The assumption is that bipartisan support remains the anchor of the relationship — and that the real test will be whether Congress and the administration continue to treat India as a strategic partner even when disputes over Russia, tariffs and market access flare.