Welcome to Foreign Policy’s South Asia Brief.
The highlights this week: The United States and India finalize a trade deal after many rounds of negotiations, violence rocks the Pakistani province of Balochistan, and India’s new budget emphasizes infrastructure and manufacturing.
Why Now for the U.S.-India Deal?
The U.S.-India trade deal announced on Monday by U.S. President Donald Trump delivers a major boost to a floundering relationship. The agreement is a major boon for India’s economy, with tariffs on products to one of its biggest export markets falling from 50 to 18 percent.
One of the big questions about the deal, which followed many rounds of negotiations, is why it took so long. India had long declined more access to politically sensitive sectors, especially agriculture—a position that contributed to failed talks.
U.S. Commerce Secretary Howard Lutnick has said Indian Prime Minister Narendra Modi’s unwillingness to call Trump last summer prevented a deal from being finalized. (India has disputed this claim.) One can’t discount the possibility that Trump’s pique at New Delhi for failing to give him credit for his role in an India-Pakistan cease-fire got in the way, too.
However, the decisions that Trump says enabled the deal to be clinched—India pulling back from Russian oil imports and promising to buy more U.S. oil—were made long ago. India ramped up Russian crude imports after the full-scale invasion of Ukraine, but it reduced those purchases after the United States implemented new sanctions on Russia last November.
Furthermore, India’s oil imports (and imports on the whole) from the United States have increased significantly in recent years. Why the deal only came about now can be attributed in part to a key individual: Sergio Gor, the new U.S. ambassador to India and the White House special envoy to South Asia.
Since arriving in New Delhi a few weeks ago, Gor has exuded positivity about the U.S.-India partnership—a notable shift in tone from the Trump administration. Gor has met with a number of high-level Indian interlocutors: External Affairs Minister S. Jaishankar, Commerce Minister Piyush Goyal, Reserve Bank of India Gov. Sanjay Malhotra, top military leaders, and Maharashtra Chief Minister Devendra Fadnavis, among others.
Gor has also been involved in key breakthroughs, including announcing an invitation to India to join Pax Silica, a U.S.-led silicon supply chain initiative, after New Delhi wasn’t initially asked to participate.
Though Gor is not a diplomat and has little prior training on India, he is a robust champion of the U.S.-India partnership: “India is a strategic partner whose trajectory will shape the region and beyond,” he said last September at his Senate confirmation hearing. He described the relationship with India as one of the most important for the United States.
Gor is very influential in the White House, and he has the ear of the president. He likely came to India wanting to get the relationship back on track, and because of his political clout, the White House—including Trump—didn’t stand in the way.
There are certainly other possible reasons for the deal getting done when it did. With tariffs contributing to rising food inflation in the United States, Trump might have domestic political considerations as well. The White House also may have worried about India’s new free trade agreement with the European Union.
Still, Gor clearly made a difference, and the deal that he helped finalize could serve as a springboard for additional progress. It could even enable a much-delayed Quadrilateral Security Dialogue leaders’ summit in New Delhi in the coming months. Then, Trump would travel to India—a trip that he was always more likely to make if he had something to brag about.
Now the U.S. president has that, and on Monday, he described Modi as one of his “greatest friends.”
What We’re Following
Balochistan attacks. Last Saturday, the Balochistan Liberation Army (BLA) carried out coordinated attacks across Balochistan province, including in the provincial capital of Quetta. Nearly 50 people, including 31 civilians, were killed; Pakistan said the military response killed at least 145 BLA fighters. It was one of the deadliest days in years in the region.
Amid all the talk of the increasing threat posed by the Tehrik-i-Taliban Pakistan (TTP), the BLA threat is often overlooked. However, the separatist group has also strengthened in recent years, thanks in part to robust recruitment drives that exploit the anger of local communities over issues from state resource exploitation to violent crackdowns.
The BLA showcased its fearsome capabilities last March, when it hijacked a passenger train traveling through Balochistan. As with the TTP, Pakistani authorities have struggled to curb the BLA, depending on kinetic operations that kill militants but fail to root out the ideologies and grievances that drive them.
India’s new budget. Indian Finance Minister Nirmala Sitharaman laid out the government’s 2026-27 budget in a speech to Parliament over the weekend. The budget differs from last year’s in that it features fewer populist measures, such as lower taxes for the middle class. Sitharaman said it will instead emphasize spending on infrastructure and manufacturing.
The new budget aims to boost development of products that play well in the current global economy; it will increase spending in sectors such as semiconductors and rare-earth magnets.
The budget also allocates $85 billion to defense—a new record and a 15 percent increase over last year. This move was likely prompted by India’s conflict with Pakistan last May and perhaps by a need to hedge against the uncertainties of the bilateral relationship with the United States, which for more than a decade has partnered with India to counter China.
Survey brings good news for Islamabad? A Gallup survey published on Monday shows that the Pakistani public’s views of the country’s economy and government are improving, even if sentiment remains negative overall. The poll found that in 2025, 31 percent of Pakistanis felt their living standards were getting better—a notable improvement from a record-low 15 percent in 2023.
Similarly, 25 percent of respondents last year said the economy on the whole was improving, compared with 12 percent in 2024. Meanwhile, approval of the country’s political leadership strengthened to 36 percent last year, up from 22 percent the year before.
To an extent, these figures aren’t surprising: Pakistan’s macroeconomy has stabilized in recent months. Still, the country continues to suffer from high poverty, and its civilian and military leaders have angered many Pakistanis by ramping up repression.
FP’s Most Read This Week
Under the Radar
In a Newsweek interview published on Sunday, Maldivian President Mohamed Muizzu made a pitch to Trump. Muizzu said that if sovereignty of the Chagos Islands, a British territory in the Indian Ocean, reverted to the Maldives, he would take steps to ensure that the United States could continue to use a military base in Diego Garcia, which is part of the archipelago.
Last year, the United Kingdom finalized a deal to eventually transfer sovereignty of the islands to Mauritius. Washington has opposed that deal, fearing it could jeopardize U.S. access to Diego Garcia. The United Kingdom said on Tuesday that it had reached an agreement with the United States to ensure both countries’ continued access to the base. (Mauritius’s position is unclear.)
In this regard, Muizzu’s pitch may be immaterial. Still, what stands out about the proposal is how Muizzu has sought to amplify the geopolitical significance of the Maldives, an island nation known for its beautiful beaches and tourism industry that happens to be located in a highly strategic area of the Indian Ocean.
Muizzu may have also tried to appeal to the Trump family’s new business interests in the Maldives to get the U.S. president’s attention. Last November, the Trump Organization announced a deal with a Dubai-based real estate developer to invest in a luxury hotel in the Maldives, with plans to open by the end of 2028.
