New Delhi, Oct 6: India and the United States are facing fresh difficulties in their efforts to conclude a bilateral trade agreement, with Finance Minister Nirmala Sitharaman saying negotiations have reached a “plateau” and that the scope for further compromise has become limited.
The latest assessment comes after months of negotiations aimed at expanding commercial ties between the two countries and addressing disagreements over tariffs, market access and the bilateral trade imbalance. The talks, which began in February 2025, have continued through several rounds without producing a final agreement.
The deadlock has become more significant as the United States seeks greater access to the Indian market, while New Delhi is attempting to protect sensitive sectors and secure competitive conditions for Indian exporters.
Sitharaman said the negotiations had reached a stage where further movement was difficult. Her comments underline the challenges confronting both sides as they attempt to reconcile their respective priorities.
The United States is India’s largest export destination, making the outcome of the negotiations particularly important for Indian manufacturers, exporters and services companies. Any prolonged uncertainty could affect investment decisions and the ability of businesses to plan their international operations.
Tariffs remain a major obstacle
Tariffs have emerged as one of the central sticking points in the negotiations. Washington has sought concessions from India on market access, while Indian negotiators have pressed for a tariff structure that does not put domestic producers or exporters at a disadvantage.
The situation has become more complicated following a new US law giving President Donald Trump authority to impose high tariffs on countries that purchase significant quantities of Russian oil. India, one of the world’s major buyers of Russian crude, could face additional pressure under such a framework.
For New Delhi, the issue extends beyond trade policy because Russian crude imports are closely linked to India’s energy requirements. Any sudden disruption or substantial increase in import costs could affect fuel prices, inflation and the broader economy.
The United States, meanwhile, has been seeking to reduce its trade deficit with India. American officials have indicated that greater access for US goods and services is an important element of any eventual agreement.
India’s position
India has continued to emphasise the importance of negotiating a mutually acceptable arrangement rather than accepting measures that could damage domestic economic interests.
Sitharaman has questioned the growing use of tariffs as a way of addressing trade deficits and argued that negotiations remain a preferable mechanism for resolving differences. She has also pointed to India’s substantial trade deficit with China while discussing the wider question of bilateral trade imbalances.
Indian officials are therefore attempting to balance several objectives at the same time. These include maintaining access to the American market, supporting domestic manufacturers, protecting sensitive agricultural and industrial sectors and ensuring that any agreement creates opportunities for Indian businesses.
For exporters, the American market remains crucial. A large number of Indian companies in sectors ranging from textiles and engineering goods to pharmaceuticals and information technology depend on demand from US customers.
Washington seeks greater market access
The US side has continued to push for greater access to India’s large consumer market.
American businesses have long raised concerns about tariffs and regulatory barriers affecting their ability to sell goods and services in India. Greater access could provide US companies with opportunities in areas such as agriculture, manufacturing, financial services and technology.
Washington is also looking at the broader trade relationship through the lens of its global economic strategy. The Trump administration has increasingly used tariffs as a negotiating instrument in discussions with trading partners.
That approach has complicated India’s negotiations because New Delhi has sought assurances that it will receive competitive treatment compared with other major economies.
Trade Minister Piyush Goyal and US Trade Representative Jamieson Greer have continued discussions, but Greer has indicated that no immediate agreement is expected.
Businesses face uncertainty
The absence of a final agreement creates uncertainty for businesses planning investments and export strategies.
Companies generally prefer stable tariff structures because long-term contracts and investment decisions depend on predictable costs. Prolonged negotiations can make it difficult for manufacturers to determine where to locate production or how to structure supply chains.
Indian exporters could also face challenges if US tariffs remain elevated compared with those imposed on competitors from other countries.
At the same time, companies that depend heavily on imported inputs could face higher costs if India makes tariff concessions on US goods without securing corresponding benefits elsewhere.
The negotiations therefore involve a complex network of interests extending well beyond the headline tariff rates.
Supply chains add importance
The trade discussions are also taking place as global companies continue to diversify their supply chains.
India has sought to position itself as an alternative manufacturing base for international companies looking to reduce excessive dependence on individual countries. Greater access to the US market could support this strategy by encouraging additional investment in Indian production facilities.
Sectors such as electronics, pharmaceuticals, engineering, chemicals and textiles could benefit from greater certainty around US market access.
However, businesses need clarity about tariffs before making major investments. A final agreement could provide that certainty, while continued negotiations could delay some decisions.
Energy complicates negotiations
India’s relationship with Russia adds another layer to the trade dispute.
Indian refiners have increased purchases of Russian crude since the disruption of global energy markets following the Russia-Ukraine conflict. The discounted supplies have helped Indian refiners manage their input costs, but the issue has increasingly become a source of friction with Washington.
The prospect of additional US tariff measures linked to Russian oil purchases has consequently become an important consideration for Indian policymakers.
Any agreement between India and the US would need to account for this wider geopolitical and economic environment.
No immediate breakthrough
Despite the difficulties, both countries have strong incentives to keep negotiating.
India and the US have expanded cooperation across technology, defence, energy, investment and supply chains. Trade remains a major component of that relationship, and businesses on both sides have an interest in reducing uncertainty.
The current impasse does not necessarily mean negotiations will end. Instead, it suggests that the two sides may require additional political and economic compromises before an agreement becomes possible.
For Indian exporters, the immediate priority will be clarity over tariffs and market access. For the US, the focus remains on reducing barriers faced by American businesses and addressing the trade imbalance.
With talks now described as having reached a plateau, the next stage will depend on whether negotiators can find room for compromise without either side making concessions that conflict with its wider economic priorities.
Until then, businesses are likely to continue operating under existing trade arrangements while closely monitoring developments between New Delhi and Washington.