An emboldened India holds out for better terms in US trade talks

NEW DELHI/WASHINGTON: India and the US did not reach a consensus on a trade agreement in recent talks, with New Delhi holding out for a better deal as Prime Minister Narendra Modi draws confidence from new trading partners, eased economic risks and political gains at home, officials and analysts said.

India’s trade minister, Piyush Goyal, said on Monday both countries remain “fully engaged” in their commitment to an agreement which is balanced and beneficial to both economies.

After months of talks, the two nations failed to finalise an interim trade agreement during US Trade Representative Jamieson Greer’s visit to New Delhi last month, despite expectations from both sides that a limited deal was within reach.

There was no consensus because Washington did not offer assurances on New Delhi’s key demands: a tariff advantage over competitors such as China and no new US levies after the deal, said an Indian government official aware of the talks.

“Our position is clear - we don’t intend to rush into a deal that is not on favourable terms or compromise on red lines like ceding ground on agriculture,” the official said.

Washington had hoped for quick trade concessions from a strategic partner as President Donald Trump prepares new tariffs likely to come into effect later this month, officials and analysts said, while India’s holdout risks higher levies on its exports and prolonged uncertainty for businesses.

Goyal had been upbeat about a consensus but a day after the talks with Greer, he said the US deal would not be implemented unless an advantage is ensured, indicating New Delhi’s hardened position and lack of urgency despite the risk of higher tariffs.

Like most countries, the bulk of goods from India currently face a 10% US tariff. But the Trump administration is expected to introduce steeper tariffs later this month through probes into excess industrial capacity. India has denied US charges of surplus capacity.

Washington has already proposed new tariffs of up to 12.5% on dozens of nations, including India, over allegations they failed to curb trade in goods made with forced labour.

The US view has been that India needs to earn the preferential treatment on trade provisions it has sought by making its own concessions, a US source aware of the talks said.

The Indian official and the US source did not wish to be named as negotiations are confidential. The Indian trade ministry and the Office of the United States Trade Representative did not respond to emailed requests for comment ahead of the story’s publication.

“I had fantastic meetings with USTR Jamieson Greer when he visited Delhi in June,” Goyal said on Monday. “Both sides reaffirmed their commitment to an agreement that is balanced, commercially meaningful, and delivers tangible benefits for businesses, farmers, workers, and consumers in both countries.”

Indian Trade Secretary Rajesh Agrawal, the top official in the ministry, said: “The framework deal is ready, whenever it is the right time, it will be signed”.

A US official, speaking on condition of anonymity, said Washington remained engaged with India and still expected an agreement, but did not offer a timeline.

The official however added India had at times been slow, bureaucratic and difficult in the negotiations, signalling that no quick deal was likely.

Asked about the impasse, White House spokesman Kush Desai said: “The Trump administration continues to productively engage with Indian officials to finalise a historic trade deal that puts Americans and America First.”

India’s exports tick up, economic risks ease

Rising exports, new trade deals with other countries and blocs and eased economic risks have strengthened India’s hand, trade analysts said.

In April-June, India’s overall goods exports rose about 15% from a year earlier despite disruptions from the war on Iran, buoyed by pricier petroleum shipments, officials said.

Exports to Gulf countries have recovered to pre-war levels, rising to $5.3 billion in May from $2.62 billion in March as traders shifted to alternative shipping routes, while exports to the United States edged up to $17.29 billion during April and May.

India is also broadening access to other developed markets, with a UK free trade pact set to take effect this month, and an EU agreement expected by early next year.

“Indian negotiators have gained some leverage in the talks, given its strong economy, diversification initiatives with other partners, and its strategic standing in the world,” said Wendy Cutler, senior vice president at the Washington-based Asia Society Policy Institute, and a former US trade official.

The interim US-Iran peace deal improved India’s economic outlook by easing oil prices, Goldman Sachs economist Santanu Sengupta said in a report.

The bank has raised its 2026 growth forecast for India to 6.8%, and lowered its inflation and current-account deficit estimates, suggesting New Delhi has more economic room to hold out for better terms.

A weaker rupee has also improved exporters’ competitiveness.

Waiting out Washington

India is also calculating that some US trade measures could face legal or political setbacks, another Indian official said.

A group of 22 Democratic state attorneys general have already filed objections to the Trump administration’s proposed tariffs from probes into forced labour.

Trade analysts said legal uncertainty over US tariffs, combined with Modi’s recent state election victories, have helped India resist a rushed deal.

Senior leaders of Modi’s Bharatiya Janata Party have argued publicly that trade agreements should protect Indian farmers and small businesses, two politically influential constituencies that New Delhi has long shielded in trade negotiations.

“India realises that delaying - or even abandoning – a rushed deal may be more prudent than locking into obligations whose costs could far exceed any temporary tariff relief,” said Ajay Srivastava, founder of the Global Trade Research Initiative, and a former trade negotiator.