New Delhi: The diplomatic temperature between India and the United States has hit a boiling point this week. Just as Indian markets were reacting to Donald Trump’s support for a massive 500% tariff on countries buying Russian oil, a fresh controversy has erupted over a “stalled” trade deal.
On Friday, January 9, 2026, the Indian Ministry of External Affairs (MEA) issued a sharp rebuttal to claims made by a top US official that India missed out on a major trade agreement because Prime Minister Narendra Modi “did not call” President Trump.
With Indian exporters already facing high duties and H-1B visa holders stuck in vetting delays, here is a complete breakdown of the situation as of January 12, 2026.
1. The “Missed Call” Controversy: What Happened?
The controversy began when US Commerce Secretary Howard Lutnick, speaking on the All-In Podcast (aired Jan 8), claimed that a US-India trade deal failed to materialize in 2025 because New Delhi was “uncomfortable” and PM Modi did not make a final phone call to President Trump to close it.
- The US Claim: Lutnick stated that the deal was “all set up,” but PM Modi did not make the call within the “three Fridays” deadline set by Washington. He added that while deals with Vietnam and Indonesia were signed, India “missed the train.”+1
- India’s Strong Rebuttal: MEA Spokesperson Randhir Jaiswal termed these remarks as “inaccurate.”
- The Truth: India clarified that PM Modi and President Trump actually spoke eight times in 2025 alone. The MEA emphasized that trade negotiations are complex and cannot be reduced to a single “missed call.”+1
2. The New Threat: 500% Tariff on Russian Oil
While the “missed call” row grabbed headlines, the bigger danger for the Indian economy is the “Sanctioning Russia Act of 2025”.
- The Bill: Reports confirm that President Trump has “greenlit” this bipartisan bill, which proposes a punitive 500% tariff on goods from countries that continue to buy Russian crude oil and uranium.
- Impact on India: India is a major buyer of discounted Russian oil. If this bill becomes law, Indian exports to the US could become 5x more expensive, effectively killing demand for Indian textiles, gems, and chemicals in America.+1
- Market Reaction: Indian stock markets have been volatile, with export-heavy sectors trading nervously since the news broke.
3. Reality Check: You Are Already Paying 50%
Many people are ignoring the fact that Indian exporters are already suffering.
- August 2025 Shock: Since August 27, 2025, the US has imposed a total 50% tariff on a wide range of Indian goods. This includes a 25% “reciprocal” tariff plus an additional 25% penalty for buying Russian oil.+1
- Current Status: Sectors like Gems & Jewellery and Textiles are currently paying these high duties. The new 500% threat would be on top of this existing burden.
4. H-1B Visa Update: Vetting Delays & Fee Hike
It is not just trade; Indian IT professionals are also feeling the heat in January 2026.
- Social Media Vetting: New reports indicate that H-1B and H-4 visa holders are facing long delays at US consulates in India due to stricter “social media vetting” introduced in December 2025. Immigration lawyers are advising against non-essential travel to India.
- Upcoming Fee Hike: The US Citizenship and Immigration Services (USCIS) has announced that Premium Processing fees for H-1B visas will increase from March 1, 2026.
What Happens Next?
- Trade Talks: Despite the noise, India maintains it is interested in a “mutually beneficial” deal. However, with the US demanding a total stop to Russian oil imports, a quick solution looks difficult.
- Legislative Action: All eyes are on the US Congress to see if the 500% tariff bill actually passes or if it is just a pressure tactic to force India to change its oil policy.
Frequently Asked Questions (FAQs)
Q1: Did PM Modi really refuse to call Donald Trump?
No. The Ministry of External Affairs (MEA) has officially denied this, stating that PM Modi and President Trump spoke 8 times in 2025. The delay in the trade deal was due to negotiation differences, not a missing phone call
Q2: What is the 500% tariff threat?
It is a proposed US law (Sanctioning Russia Act) that would impose a 500% tax on goods from countries (like India and China) that “knowingly” trade in Russian oil or uranium.
Q3: Are Indian goods already taxed at 50% in the US?
Yes. Since August 27, 2025, the US has imposed a 50% tariff on several Indian products (Textiles, Gems, etc.) citing “unfair trade practices” and Russian oil purchases.
Q4: Is there a new H-1B fee hike in 2026?
Yes. While the petition fee was hiked last year, a new increase in Premium Processing fees will take effect from March 1, 2026.
Q5: Should H-1B holders travel to India right now?
Immigration experts are advising caution. Due to strict “social media vetting” started in Dec 2025, many visa appointments are getting delayed or rescheduled, risking extended stays in India.