India and the United States are making steady progress towards addressing trade disputes and concluding a new bilateral trade agreement, with recent high-level negotiations hinting towards a cautious breakthrough in relations after months of tariff tension. The latest round of talks, held in New Delhi between India's Special Secretary for Commerce Rajesh Agrawal and US Assistant Trade Representative Brendan Lynch, were described as "positive and forward-looking," according to statements from both governments.
While both nations agree on the importance of their economic ties, significant hurdles remain. Central among these are the US demands for greater market access to India's agricultural and dairy sectors, which are those areas where Indian negotiators continue to resist any drastic opening, citing the livelihood concerns of millions of farmers. Washington has also used tariffs as a leverage in its campaign to pressure India to reduce dependence on Russian oil, a point of geopolitical tension that further complicates trade negotiations.
Nevertheless, there is calculated optimism, with India’s Chief Economic Adviser V. Anantha Nageswaran suggesting that the US could ease penal tariffs "within the next 8-10 weeks," potentially reducing reciprocal duties to 10-15%. Both governments are expected to formalise a sixth round of negotiations soon.
Tensions between the two countries escalated in late August, when the US administration imposed a harsh 50% tariff on Indian exports, including an additional 25% penalty linked to India's continued imports of Russian crude oil. Although products such as mobile phones and pharmaceuticals are exempted, but textile, machinery, and agricultural sectors are hit hard, hurting Indian exports to the US. Despite these challenges, India's Commerce Minister Piyush Goyal and US negotiators have insisted that the current discussions are on the right track. Both sides have pushed efforts towards a mutually beneficial arrangement, with Goyal highlighting the strong strategic partnership and the absence of much friction.
With India’s exports to the US estimated at $86 billion last fiscal year, any breakthrough would have significant economic implications and could boost India’s trade aspirations. The tone of recent talks and posted public statements suggest that although the hurdles remain, the India-US trade relationship is on a path toward resolution and a fresh cooperation towards a mutually-beneficial deal favouring both-ways.
