Senior officials from India and the United States have acknowledged that their efforts to finalize a trade agreement have stalled once again. In February, both countries had reached a framework to reduce tariffs on Indian goods from 50% to 18%, following previous failed talks. However, the Supreme Court invalidated President Donald Trump’s use of emergency powers to impose global tariffs, establishing a 10% baseline rate. Despite this, a final deal remains out of reach.
Trade talks are said to have reached a “plateau,” according to India’s Finance Minister Nirmala Sitharaman, with U.S. Trade Representative Jamieson Greer stating that a deal is not imminent. Neither nation has specified why the talks are delayed, but complications have arisen, including new U.S. legislation that could impose up to 100% tariffs on Indian goods due to India’s purchase of Russian oil, which has not significantly decreased. This potential increase in tariffs contrasts with India’s goals to secure better terms than countries like Vietnam and China.
Additionally, the U.S. has not completed its Section 301 trade investigation regarding multiple nations and alleged industrial overproduction, complicating the tariff landscape for Indian goods. Relations between India and the U.S. have been strained over various events, such as a U.S. military attack in Oman and India’s rejection of U.S. claims regarding Pakistan.
The U.S. remains India’s largest export market, and exports have shown resilience, rising to $42.79 billion from $40.39 billion compared to last year. However, Indian analysts warn that without a trade deal, India risks higher tariffs due to ongoing investigations and its oil purchases. India aims to protect sensitive sectors like agriculture while negotiating better tariff terms, and the U.S. desires a reduction in Russian oil imports. Potential further talks may occur when U.S. Secretary of State Marco Rubio visits India later this month.
With information from Reuters
