India and the United States are still struggling to finalise a trade agreement after months of negotiations. Washington says both sides have identified the main issues standing in the way of a deal, but there is no clear sign of an immediate breakthrough.

Recent discussions between US Trade Representative Jamieson Greer and India’s Commerce Minister Piyush Goyal have kept the talks moving. However, major differences remain over tariffs, access to agricultural markets, industrial capacity and India’s continued purchases of Russian oil.

The delay comes at an important time for both countries. The United States is India’s largest export market, while American companies are keen to gain greater access to India’s growing consumer economy. A trade agreement could give businesses more certainty and encourage investment. Without one, exporters must continue to navigate changing tariff policies and the possibility of further trade restrictions.

Both governments have expressed interest in reaching an agreement, but turning that intention into a deal is proving difficult. The remaining disagreements involve politically sensitive issues, leaving negotiators with limited room to manoeuvre.

WHAT HAPPENED?

The latest discussions took place on the sidelines of the G20 Trade Ministers’ Meeting in Milwaukee in early October.

Greer described his conversation with Goyal as constructive and indicated that officials were continuing to work towards an agreement. However, he also made clear that a deal was not imminent, acknowledging that several important issues remained unresolved.

The comments followed a cautious assessment from India’s Finance Minister Nirmala Sitharaman, who said the negotiations had reached a plateau. Further concessions, she suggested, could be difficult for both countries.

Trade negotiations have been underway since 2025, with New Delhi and Washington seeking a broader arrangement to improve market access and strengthen economic ties. A framework announced in February 2026 appeared to offer a way forward, including the prospect of lower US tariffs on many Indian goods.

Since then, however, changes in US tariff policy and disagreements over the terms of a final agreement have complicated the process.

For now, the talks remain active. The bigger challenge is finding terms that deliver meaningful benefits to both economies without forcing either government to make concessions it considers too costly.

WHY ARE THE TALKS STUCK?

1. TARIFFS REMAIN A MAJOR OBSTACLE

Tariffs continue to be one of the biggest sticking points.

India wants more predictable access to the US market so its exporters can compete without worrying about sudden increases in import duties. Washington, meanwhile, wants an agreement that addresses its trade concerns and gives American companies better opportunities in India.

The two countries reached a framework in February that reduced the punitive US tariff on many Indian goods from 50% to 18%. Subsequent developments in US tariff policy, including a Supreme Court ruling on the use of emergency powers for sweeping global tariffs and the introduction of a 10% baseline tariff under a subsequent policy framework, have complicated the picture.

The result is greater uncertainty over the tariff arrangements that would ultimately apply under a bilateral agreement.

For Indian exporters, that uncertainty makes business planning more difficult. Companies need to know how much their products will cost when they reach the US market so they can set prices, negotiate contracts and plan production.

American businesses have their own concerns. They want improved access to India and clearer commitments that support their commercial interests.

Until both sides agree on the final tariff structure, the negotiations are likely to remain difficult.

2. AGRICULTURE REMAINS A SENSITIVE ISSUE FOR INDIA

Agricultural market access is another major hurdle.

The United States wants greater access for its products in India, including agricultural goods. New Delhi, however, is reluctant to make commitments that could expose sensitive domestic sectors such as dairy, poultry, rice and wheat to greater competition.

Agriculture supports millions of Indian households and remains politically important across the country. Changes affecting farmers, rural incomes or food security can quickly become contentious.

For India, any agreement must create opportunities for exporters without placing excessive pressure on domestic producers. Washington, on the other hand, wants meaningful market-opening commitments rather than limited concessions in sectors where access is already relatively straightforward.

Finding a middle ground will require careful negotiations over which products are covered, what restrictions remain and whether some changes are introduced gradually.

A compromise may be possible, but agriculture is unlikely to be an easy issue to settle.

RUSSIAN OIL ADDS A GEOPOLITICAL DIMENSION

India’s purchases of Russian crude have added another layer of complexity to the negotiations.

Washington has argued that continued purchases of Russian oil help Moscow finance its war in Ukraine. India has maintained that its energy decisions are driven by domestic demand, affordability and the need to secure reliable supplies for a population of more than a billion people.

Russian crude became an important source of discounted oil for Indian refiners after Russia invaded Ukraine in 2022. Since then, changes in global energy markets and disruptions linked to conflict in the Middle East have made energy security an even more pressing concern.

The disagreement now has potential consequences for trade.

A US law signed in 2026 authorises the possibility of tariffs of up to 100% on goods from countries that continue to purchase significant quantities of Russian oil. However, this is a potential penalty, not a blanket tariff that has already been imposed on all Indian exports. Its application would depend on subsequent US decisions and implementation.

For India, reducing Russian oil purchases could mean higher energy costs or the need to reorganise supply arrangements. Continuing those purchases, meanwhile, could leave Indian exporters exposed to additional trade pressure from Washington.

New Delhi must therefore balance two important priorities: securing affordable energy supplies and maintaining reliable access to one of its biggest export markets.

That makes the oil issue particularly difficult to separate from the wider trade negotiations.

THE US INDUSTRIAL-CAPACITY INVESTIGATION

Washington’s investigation into alleged excess industrial capacity is another factor complicating the talks.

The US is examining whether production in certain economies exceeds domestic demand and contributes to unfair competition or harms American industries. The findings could influence future tariff decisions affecting several trading partners, including India.

Until the investigation is completed and its implications become clearer, Indian exporters face uncertainty over the duties that could eventually apply to their products.

India has challenged the suggestion that it has structural excess manufacturing capacity in the sectors under discussion. New Delhi argues that its industrial production serves domestic demand as well as international markets.

The disagreement reflects different economic priorities. Washington is focused on protecting American manufacturing and addressing trade concerns, while India wants to expand its industrial base and strengthen its position as a global manufacturing hub.

The outcome of the investigation could therefore affect not only the current negotiations but also the broader trading relationship between the two countries.

For businesses, the immediate concern is straightforward: it is difficult to make long-term investment and export decisions when future tariff conditions remain unclear.

WHAT IS AT STAKE FOR INDIA?

The United States is India's largest export destination, making the outcome of the negotiations important for businesses across a wide range of industries.

India’s goods exports to the US reached $42.79 billion between April and August 2026, compared with $40.39 billion during the same period a year earlier. India also recorded a goods trade surplus of nearly $34 billion with the US in the 2025–26 financial year.

These figures underline how important the American market is to Indian businesses.

Exporters of pharmaceuticals, engineering goods, textiles, electronics and other products must account for tariffs when setting prices and negotiating contracts. If duties rise or remain unpredictable, companies may have to absorb additional costs, accept lower profit margins or risk losing orders to competitors.

A stable trade agreement could make planning easier and encourage businesses to invest in additional production capacity. Without one, companies may need to reconsider their pricing strategies and exposure to the US market.

The impact will vary by industry. Certain products, including some generic medicines and smartphones, have been reported as exempt from the current 10% baseline tariff. The treatment of individual goods depends on the applicable rules and any sector-specific measures.

This means the risk is not that every Indian export will suddenly face the same tariff. The bigger concern is that a changing and uncertain tariff environment can make it harder for businesses across the export economy to plan with confidence.

WHAT DOES WASHINGTON WANT?

The US administration is looking for better access for American businesses and changes that address what it considers imbalances in bilateral trade.

Its priorities include lowering barriers for US products, expanding access to India's market and addressing concerns related to industrial capacity and Russian oil purchases.

India wants a different balance. New Delhi is looking for commercially meaningful benefits for its own exporters while protecting sensitive domestic industries and retaining flexibility over its energy supplies.

Both governments have strong reasons to reach an agreement. A stable trade framework could encourage investment, strengthen supply chains and give businesses greater confidence in the relationship.

However, both sides also face domestic political and economic pressures that limit how far they can compromise.

The negotiations are therefore about much more than agreeing on tariff percentages. They involve market access, industrial policy, energy security and how the benefits of a trade agreement will be shared between two major economies.

CAN A LIMITED DEAL BREAK THE DEADLOCK?

An interim agreement could offer a way forward.

Rather than trying to resolve every disagreement at once, the two countries could settle a narrower set of issues and leave more difficult questions for future negotiations.

Such an arrangement could provide some tariff certainty and allow both governments to demonstrate progress without resolving every dispute immediately. Its value, however, would depend on the sectors covered, the concessions offered and whether it genuinely reduces uncertainty for businesses.

Analysts at BMI, a unit of Fitch Solutions, have indicated that an interim deal remains possible, although a near-term breakthrough appears unlikely given the disputes over market access, agriculture, Russian oil and trade imbalances. The December G20 leaders’ meeting could provide an opportunity to push for progress, but it does not guarantee an agreement.

Even a limited deal would leave important questions unanswered if it failed to address the underlying sources of tension.

For exporters, a partial agreement could still be useful if it establishes clear rules and predictable tariff treatment for key products. Businesses would nevertheless need to examine the actual terms rather than assume that an announcement means all trade barriers have been removed.

THE ECONOMIC RISKS OF A PROLONGED DELAY

The longer the negotiations continue without a final agreement, the harder it becomes for businesses to plan around a stable trading environment.

Exporters may postpone investment, reconsider supply chains or absorb additional costs to remain competitive. Importers could face uncertainty over prices and access to products, while investors may become more cautious about industries exposed to possible tariff changes.

Further tensions could also affect market sentiment and put pressure on the rupee, which has already faced challenges from global financial conditions and high oil prices.

Still, the absence of a trade deal does not mean commercial ties between India and the US have come to a halt. The latest export figures indicate that shipments have continued to grow despite the unresolved negotiations.

The concern is what happens next. Additional tariffs or prolonged uncertainty could weaken that momentum and make it harder for businesses to sustain export growth.

For both governments, reaching an agreement would help reduce these risks. But the terms of the deal will matter just as much as the announcement itself.

FACT CHECK METER

FACT METER: 97%

STATUS: NEGOTIATIONS CONTINUE — FINAL DEAL NOT IMMINENT

CONFIRMED

  • US Trade Representative Jamieson Greer said the two sides had identified the remaining sticking points but that a deal was not imminent.

  • Finance Minister Nirmala Sitharaman said the negotiations had reached a plateau, with further concessions likely to be difficult.

  • Major areas of disagreement include tariffs, agricultural market access, Russian oil purchases and US concerns about industrial capacity.

  • India’s goods exports to the US reached $42.79 billion between April and August 2026, up from $40.39 billion a year earlier.

  • A US law authorises the possibility of tariffs of up to 100% linked to purchases of Russian oil. This potential measure should not be confused with a tariff already imposed uniformly on all Indian goods.

IMPORTANT DISTINCTIONS

  • Negotiations are ongoing, and no final comprehensive agreement has been announced.

  • The February framework and subsequent changes in US tariff policy have complicated the final tariff structure.

  • Any potential tariff penalty linked to Russian oil would depend on US implementation and the scope of the measure.

  • A delay in signing a deal does not mean trade between the two countries has stopped.

AWX VERDICT

The India–US trade negotiations remain active, but several important disagreements are unresolved. Both governments have reasons to reach an agreement, yet differences over agriculture, tariffs, energy policy and industrial capacity continue to limit the scope for an immediate breakthrough.

WHAT TO WATCH NEXT

  • Further US–India talks: Whether negotiators make progress on outstanding tariff and market-access issues.

  • Leadership-level engagement: Whether further discussions between President Donald Trump and Prime Minister Narendra Modi help narrow the differences.

  • US industrial-capacity investigation: Whether the findings clarify the future tariff treatment of Indian exports.

  • Russian oil policy: Whether Washington provides more clarity on how it intends to use its tariff authority.

  • Agricultural negotiations: Whether both countries can find a compromise that protects India's sensitive sectors while offering meaningful access to US products.

  • Export performance: Whether Indian shipments to the US continue to grow despite uncertainty over trade policy.

  • Interim agreement prospects: Whether a narrower deal can give businesses greater certainty while broader issues remain under discussion.

The next meaningful sign of progress will be a concrete agreement on the outstanding issues, rather than another statement that negotiations are continuing.

THE AWX BOTTOM LINE

The India–US trade deal remains stuck because both governments are trying to protect their economic interests while securing greater access to each other’s markets.

India wants better opportunities for its exporters without exposing sensitive agricultural sectors to excessive competition or sacrificing flexibility over energy imports. Washington wants improved access for American businesses, action on trade concerns and progress on issues linked to Russian oil and industrial capacity.

Both countries have compelling commercial reasons to reach an agreement. Yet the remaining disputes are politically and economically sensitive, leaving negotiators with limited room to compromise.

For businesses, uncertainty remains the immediate concern. A deal could bring clearer rules, more predictable tariffs and stronger investment confidence. Until the terms are finalised, however, exporters will need to prepare for further changes in trade policy.

Washington says the sticking points have been identified. The real test is whether New Delhi and Washington can agree on what each side is prepared to offer—and what it expects in return.

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