Welcome to Foreign Policy’s South Asia Brief.
The highlights this week: U.S. Secretary of State Marco Rubio wrapped up a four-day visit to India aimed at repairing bilateral ties, Indian Commerce Minister Piyush Goyal leads a 100-member trade delegation to Canada, and Sri Lanka’s central bank hikes its main interest rate amid the Iran war.
Rubio’s Charm Offensive in New Delhi
U.S. Secretary of State Marco Rubio concluded a four-day trip to India on Tuesday. At first glance, it seems like a productive trip. He held a series of high-level engagements, including meeting with Indian Prime Minister Narendra Modi, resulting in what Rubio described as an Indian pledge to purchase $500 billion in U.S. goods over the next five years.
Rubio included a bit of cultural diplomacy in his agenda, with side visits to Kolkata, Jaipur, and the Taj Mahal in Agra. Back in New Delhi on Tuesday, he participated in a foreign minister level summit of the Quadrilateral Security Dialogue, which led to a joint statement pledging cooperation in areas ranging from maritime security to critical minerals.
Yet Rubio’s visit underscored a disconnect in U.S.-India relations: Washington seems to be more sanguine about the state of bilateral ties than New Delhi is, and it is not sufficiently concerned about a large trust gap between the two capitals.
U.S.-India relations plunged into crisis early in U.S. President Donald Trump’s second term because of new U.S. tariffs, harsh White House criticism of India’s economy, U.S. immigration policy, anti-India rhetoric from some Trump supporters, and Trump’s embrace of Pakistan.
Despite all this, the relationship has somewhat stabilized: The White House has stopped its criticism of India, and a new framework trade deal has lowered U.S. tariffs. Sergio Gor, the U.S. ambassador to India and a close Trump confidante, arrived in New Delhi in January seemingly on a mission to repair relations.
On the heels of this momentum, Rubio’s visit leaned into the charm offensive. The trip included a lavish party at the U.S. Embassy that marked the United States’ 250th anniversary. At one point, Gor called Trump, and the president lavished praise on India via speakerphone in front of Rubio and hundreds of guests, saying, “India can count on me 100 percent.”
Though this all made for good optics, Rubio’s overtures ultimately did little to address Indian concerns that have prevented a full reset in relations.
One is Trump’s continued embrace of Pakistan. In recent years, India has grudgingly accepted U.S. willingness to work with its rival. But this time is different, because of the timing and intensity of Trump’s affinities for Pakistan: He has repeatedly praised top Pakistani leadership, including in the wake of India’s four-day war with Pakistan last year.
Trump’s approach to China, India’s main strategic competitor, also worries New Delhi. It appears that Trump wants to reach an understanding with Beijing that eases U.S.-China competition. Rubio’s participation in the Quad summit won’t ease those concerns—especially after Trump’s visit to Beijing in May paved the way for more bilateral cooperation.
There is also a view in New Delhi that the White House now views India in a fundamentally different light than past U.S. administrations. Speaking at a conference in New Delhi in March, U.S. Deputy Secretary of State Christopher Landau warned that the United States won’t “make the same mistakes with India that we made with China 20 years ago.”
Landau’s point was that if the White House risks making too many economic concessions to India, it could eventually overtake the United States economically. For many Indian officials, this comment telegraphed the Trump administration’s problematic approach, framing the United States’ partnership with India through a transactional lens.
For all the focus on optics during Rubio’s visit, perhaps the most telling gesture came from the Indian side: When the top U.S. diplomat landed in New Delhi, he was greeted not by India’s external affairs minister or another senior figure, but by a mid-level bureaucrat.
That treatment hinted at how New Delhi feels about the Trump administration—and how much work U.S. officials still have to do to get the relationship back on track.
What We’re Following
India’s trade mission to Canada. Indian Commerce Minister Piyush Goyal led a 100-member trade delegation to Canada this week—the largest to travel outside of India, according to Goyal—for meetings with Canadian officials, traders, and investors. The delegation focused on areas including clean energy, artificial intelligence, automobiles, and agriculture.
On Tuesday, Goyal met with Canadian Prime Minister Mark Carney to discuss a future trade agreement. The record-setting delegation highlights just how far India-Canada ties have come in recent years. The relationship hit rock bottom in 2024 over Canadian allegations of Indian transnational repression.
But since former Canadian Prime Minister Justin Trudeau—who India personally blamed for the plunge in ties—was replaced with Carney, the two countries have made a dramatic comeback. A formal reset in relations came last year, when Carney met Modi on the sidelines of a G-7 summit in Alberta in June and a G-20 summit in South Africa in November.
India’s trade tensions with the United States have also facilitated the rapprochement. New Delhi is looking to expand access to key markets in the West because of uncertainties about its future commercial ties with Washington. India concluded free trade agreements with the European Union last January and the United Kingdom last year.
Sri Lanka’s interest rate hike. On Tuesday, Sri Lanka’s central bank raised its main interest rate from 7.75 percent to 8.75 percent—the highest increase since March 2023, when the country was in the throes of a financial crisis and recovering from a loan default the previous year. It’s also the first rate change since last May, when it was lowered by 0.25 percent to bolster growth.
The move came as a surprise to economists, who expected a raise but not such a high one. Central bank officials cited rising inflation and currency depreciation, both caused by the Iran war, as the reason for the decision. Indeed, it reflects Sri Lankan officials’ concerns about the fragility of the country’s economy a few years after the crisis.
Ominously, Sri Lanka’s annual inflation rate rose from 2.2 percent in March to 5.4 percent in April—still lower than the staggering 70 percent figure during the height of the 2022-2023 crisis. Economists say the interest rate hike means that the government is turning attention away from promoting growth to facilitating price stability.
Pakistan’s Abraham Accords conundrum. During a phone call on Saturday, Trump reportedly told the leaders of Pakistan and other Muslim countries involved in efforts to end the Iran war that he would like them to join the Abraham Accords and normalize ties with Israel (if they have not already).
Trump later posted on Truth Social that “it should be mandatory” that they sign onto the accords, though he did say it would be “accepted” if a couple of countries—he did not specify which ones—provided a reason not to normalize ties.
This is awkward for Pakistan, which has an ironclad policy that it will not recognize Israel until there is a Palestinian state. Islamabad has linked the issue to the cause of Kashmir, suggesting that normalizing ties with Israel would betray its commitment to both the Palestinian and Kashmiri people.
Pakistan is unlikely to sign the Abraham Accords, though if its ally Saudi Arabia were to do so, then it might feel pressure to follow suit.
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Under the Radar
On May 14, five Italian scuba divers disappeared below the surface of the Vaavu Atoll in the Maldives. Nearly a week later, a team of Maldivian and international rescue divers recovered their remains from a large undersea cave.
The accident marks the deadliest scuba diving tragedy in the history of the Maldives. Additionally, a diver from the country’s national defense force died from decompression sickness during rescue efforts.
It’s not yet clear what led to the divers’ deaths or to their decision to swim deep into the cave; its entrance lies nearly 164 feet below the surface, well over the 98-foot restriction for recreational diving per Maldivian law. The Italian divers were marine researchers exploring the country’s largest barrier reef.
An investigation is now underway, with high stakes: Tourism drives the economy of the Maldives, and scuba diving is a major part of it.
