India, US eye quick trade deal as negotiations resume amid tariff tensions

New Delhi: India and the US agreed to intensify efforts to quickly reach a mutually-beneficial trade deal, two people aware of the development said, as the two nations acknowledged the enduring importance of trade ties between them.

In a day-long discussions on Tuesday between the American trade team led by chief negotiator Brendan Lynch and Indian officials headed by Rajesh Agarwal, special secretary in the department of commerce, both sides agreed to move the negotiation process from where it had stalled, with the objective of quickly reaching a bilateral trade agreement (BTA).

US president Donald Trump's decision to impose a punitive 25% duty on Indian exports for buying Russian oil, over and above the reciprocal tariff of 25%, strained ties between the two countries, stalling trade pact negotiations.

The cumulative 50% tariff, effective 27 August, has dealt a heavy blow to labour-intensive sectors such as textiles, engineering goods, gems and jewellery, and agricultural products, prompting India to push harder for duty concessions in the proposed deal.

“It was decided to intensify efforts to achieve the early conclusion of a mutually beneficial trade agreement,” commerce and industry ministry said in a statement.

According to the people cited above, the agenda included long-pending issues of tariff parity, greater market access for Indian goods such as pharmaceuticals and seafood, and US concerns over India’s Quality Control Orders that Washington has repeatedly flagged as non-tariff barriers.

Relief for exporters

For India, the main priority is to get relief for its exporters hit hard by the steep tariff hike, while the US is pushing for broader reforms that can bring more stability and certainty to trade in the long run, the first person said.

However, trade experts are of the view that without the withdrawal of the additional 25% oil-linked tariff, the negotiations will not yield any substantial outcome, as the political and legal compulsions in Washington make it difficult to offer India any relief at this stage.

“Unless Washington rolls back the additional 25% tariff linked to Russian oil, no meaningful progress can be made. The US has tied these duties directly to its legal case before the Supreme Court, which makes relief almost impossible in the short term. At the same time, while the US wants India to open up sensitive areas like agriculture, dairy, e-commerce, and patent rules, New Delhi is unlikely to compromise on sectors that affect the livelihood of 700 million farmers or its regulatory autonomy," said Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI). India has, however, shown flexibility by offering to cut tariffs on more than 95% of US industrial goods, which do not touch its core red lines, he said.

As per the second person, more intensive rounds of talks are now planned in the coming weeks.

Promise of early conclusion

The talks resumed after Trump and Prime Minister Narendra Modi expressed confidence on 10 September that the negotiations would reach an early conclusion.

First, in a post on his social media platform Truth Social, Trump said he was pleased that the two nations were continuing talks to address trade barriers and looked forward to speaking with his “very good friend” Modi in the coming weeks. “I feel certain that there will be no difficulty in coming to a successful conclusion for both of our great countries,” he wrote.

Responding to the overture, Modi, in a post on X, underlined the strength of the India-US partnership and stressed that the ongoing negotiations would help unlock “the limitless potential” between the two economies.

Mint reported earlier this month that the talks would restart and that the first tranche of the deal would be sealed before the deadline set by the leaders of both countries, which is the fall of 2025—extending until November in the Indian calendar.

The sixth round of face-to-face talks for a bilateral trade agreement between India and the US was to be held on 25 August.

However, they were postponed in part due to disputes over opening India’s farm and dairy markets, and after the US imposed an additional 25% levy on Indian exports from 27 August. With the US’s tariffs at 50%, India is among the most heavily penalised American trading partners.

India, however, pushed back sharply, and began to strengthen trading ties with other nations, including China.

India’s ministry of external affairs had said the country was being unfairly singled out for buying Russian oil, and that, like any major economy, the government would take all necessary measures to safeguard India’s national interests and economic security.