India and Pakistan have contended for the Kashmir region — the southern part of which lies in India's Jammu and Kashmir state — since the end of British rule in 1947. Despite a ceasefire reached in 2003 after several armed conflicts, instability in the region continued, leading to the emergence of various extremist groups.
Tensions increased earlier in August after India revoked the special status of the Jammu and Kashmir state. Under the government’s new initiative, Jammu and Kashmir will be divided into two union territories that will be under New Delhi control.
Pakistan reacted angrily to India downgrading the Muslim-majority region to a territory and promised to protect Kashmiris. Islamabad expelled the Indian ambassador, halted bilateral trade and promised to raise the issue with the International Court of Justice.
On Monday, Trump discussed with Pakistani Prime Minister Imran Khan possible ways to de-escalate existing tensions between Islamabad and New Delhi. Trump and Khan also talked about efforts to combat terrorism and the importance of an Indo-Pakistani dialogue to resolve disputes, according to the White House.
US Needs Greater Market Access in India
The White House said that American business needs greater access to markets in the world’s second-most populated country.
"The President reaffirmed the importance of greatly increasing trade between the United States and India, and highlighted the need for resolving barriers to free, fair, and reciprocal trade, which includes improving United States companies’ market access in India", according to the Tuesday statement.
While the United States and India have bilateral trade to the tune of over $140 billion, the Stratfor geopolitical intelligence consultancy in a recent report claimed that disputes over trade, immigration and technology have strained their relationship, prompting the need for a deal.
Last year, the Trump administration refused to exempt India from steel tariffs and removed a special trade designation referred to as a Generalized System of Preferences (GSP) that affected over $5 billion of Indian duty-free products. The Modi administration retaliated by slapping tariffs on 28 US goods.
The two sides are reportedly negotiating a partial trade deal under which Washington will reinstate New Delhi's benefits in exchange for concessions on market access and medical devices, among other areas, according to Stratfor.
Washington has also cracked down on the issuance of H-1B visas in the tech sector, hitting domestic giants such as Google, Microsoft and Amazon, as well as Indian consulting firms like Tata, Wipro and Infosys that have substantial operations in the United States, providing IT professionals from India.