Key facts
- India-US trade talks have stalled, with a deal not considered imminent.
- A new US law could lead to up to 100% tariffs on Indian goods due to New Delhi's purchase of Russian oil.
- India seeks to protect its agricultural sector and secure better tariff treatment for exporters.
- The US wants India to cut Russian oil purchases, citing financing for the war in Ukraine.
- India's goods exports to the US rose to $42.79 billion in April-August.
- US Secretary of State Marco Rubio is expected to visit India later this month.
Long-running efforts to finalize a bilateral trade agreement between India and the United States have stalled again, with senior officials indicating little room for maneuver. The two nations had agreed to a framework in February that reduced punitive tariffs on most Indian goods from 50% to 18%. However, a final deal remains elusive.
Trade talks have reached a "plateau," according to India's Finance Minister Nirmala Sitharaman, and a deal is not "imminent," commented United States Trade Representative Jamieson Greer. Neither side has provided detailed reasons for the delay.
Complications include a new US law that could impose up to 100% tariffs on Indian goods due to New Delhi's continued purchases of Russian oil, which the US argues helps finance the war in Ukraine. India maintains its fuel sourcing decisions are driven by the energy needs of its large population, with Russian crude becoming particularly important due to discounted prices and global supply disruptions.
Another factor holding back a deal is an ongoing US Section 301 trade investigation into several nations over alleged excess industrial capacity, which could impact final tariff rates on Indian goods. The US is India's largest export market, and while exports have remained resilient, analysts warn that without a trade deal, India risks higher tariffs, potentially hurting businesses, market sentiment, and the Indian currency.
India is seeking to protect sensitive sectors like agriculture and secure better tariff treatment for its exporters, while the US is focused on India's Russian oil purchases. US Secretary of State Marco Rubio is expected to visit India later this month, potentially offering an opportunity for progress. Prime Minister Modi and President Trump also spoke by phone on September 30 and are expected to discuss progress again soon.