The United States has extended an invitation to India to join Pax Silica, a strategic alliance aimed at building secure silicon supply chains, as both nations continue active engagement on a comprehensive trade deal. US Ambassador to India Sergio Gor announced the development during his first address after taking charge in New Delhi, emphasizing the strengthening partnership between the world's two largest democracies.

Trade Negotiations Gain Momentum

Both countries are actively pursuing trade negotiations, with the next round scheduled for Tuesday. "Both sides continue to actively engage. In fact, the next call on trade will occur tomorrow. Remember, it is the world's largest nation; so it's not an easy task to get this across the finish line, but we are determined to get there," Gor stated. The negotiations have gained significance following US Trade Representative Jamieson Greer's acknowledgment on December 9, 2025, that India had put forward the "best offer the US has ever received."

Tariff Impact on Export Performance

Indian exports to the US have experienced significant volatility due to escalating tariffs that reached 50% by August. The impact became evident through monthly export data, showing initial resilience followed by sharp declines and subsequent recovery signs.

Despite these challenges, India's overall goods exports demonstrated resilience, reaching $38.13 billion in November 2025, marking the highest November figure in the past decade.

Pax Silica Alliance Expansion

The Pax Silica initiative represents a strategic US-led effort to establish secure and innovation-driven silicon supply chains spanning critical minerals, energy inputs, advanced semiconductor manufacturing, AI development, and logistics. "Today, I'm pleased to announce that India will be invited to join this group of nations as a full member next month," Gor announced.

Strategic Partnership Framework

Ambassador Gor emphasized the multifaceted nature of US-India cooperation, extending beyond trade to encompass security, counter-terrorism, energy technology, education, and health sectors. He highlighted the personal relationship between Prime Minister Narendra Modi and President Donald Trump, stating, "I can attest that his friendship with Prime Minister Modi is real."

The ambassador characterized the Indo-US relationship as potentially "the most consequential global partnership of this century," noting that "no partner is more essential than India." Recent diplomatic developments have included meetings between US deputy trade representative Rick Switzer and India's commerce secretary Rajesh Agarwal on December 10 to advance negotiations.

Looking Ahead

The alliance gains particular significance as major economies seek to diversify global supply chains and reduce dependence on China-dominated critical and emerging technologies. With India's invitation to join Pax Silica and continued trade negotiations, both nations appear committed to deepening their strategic partnership despite recent diplomatic tensions and tariff-related challenges in bilateral trade.

Market expert Ajay Bagga has issued a stark warning about the potential economic consequences of the ongoing India-US trade stalemate, expressing concerns that prolonged negotiations could result in significant job losses across key export sectors. Speaking exclusively to NDTV Profit, Bagga painted a pessimistic picture of the bilateral trade talks, stating he does not foresee a trade deal materialising in the near term.

Trade Deal Prospects Remain Dim

Bagga's assessment comes amid growing uncertainty over the India-US trade relationship, with the expert citing a lack of urgency from the American side. "I don't foresee a trade deal. They're making an example out of India," Bagga told NDTV Profit, suggesting that the US approach lacks the necessary commitment to reach a swift resolution.

The comments follow recent pushback from Indian officials against speculation about delays in the negotiations. Union Commerce Minister Piyush Goyal had urged confidence in India's negotiating position after the Ministry of External Affairs rejected claims that talks stalled due to Prime Minister Narendra Modi not calling US President Donald Trump.

Sector-Specific Job Loss Risks

The market expert highlighted specific vulnerabilities across India's labour-intensive export sectors, warning of potential second-order effects that could ripple through the economy:

Bagga emphasised that the services sector faces particularly acute risks, given its substantial contribution to India's external earnings. "It is a very big risk for India," he stated, outlining a concerning chain of effects: prolonged stalemate leading to continued tariff pressure and uncertainty, which would weaken export competitiveness and ultimately create employment stress in key sectors.

Geopolitical Factors Shape Trade Outcomes

The expert drew connections between trade policy and broader geopolitical developments, suggesting that the resolution of the 25% punitive tariff on India may depend on factors beyond bilateral economic considerations. According to Bagga, "The 25% excess tariff could be removed if there is a Russia–Ukraine peace deal," indicating that trade outcomes are increasingly intertwined with global political settlements rather than purely economic negotiations.

This perspective highlights the complex web of international relations that now influences bilateral trade discussions, making traditional economic diplomacy more challenging to navigate.

Call for Interim Solutions

Despite the challenging environment, Bagga advocated for a pragmatic approach to the negotiations. He urged India to pursue interim arrangements even if a comprehensive trade agreement remains elusive. "India needs to conclude some kind of a transient agreement, even if a trade deal doesn't happen," he recommended, though he expressed doubts about movement given what he described as a "very aggressive Trump administration."

Broader Market Concerns

Beyond trade issues, Bagga also raised concerns about developments in US monetary policy, specifically criticising the criminal investigation involving Federal Reserve Governor Jerome Powell. He described this as a "huge disappointment" and warned that markets would closely monitor the fallout, particularly in bond markets. The expert noted that previous market disappointments had been reflected in bond market movements, suggesting similar patterns could emerge.

Bagga's comprehensive assessment underscores the interconnected nature of trade policy, geopolitics, and market dynamics, painting a picture of significant challenges ahead for India's export-dependent sectors unless diplomatic breakthroughs emerge.

Source: https://www.moneycontrol.com/news/business/markets/it-s-a-very-big-risk-for-india-ajay-bagga-warns-india-us-trade-limbo-could-cost-jobs-in-these-sectors-13768451.html