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Informist, Tuesday, Sept. 16, 2025

NEW DELHI – Chief negotiators of India and the US are engaged to find a common ground for a trade deal here in the capital Tuesday. The ongoing discussions are the latest chapter in a story, marked by turbulence, tariffs and traduce, which started as Donald Trump began his second term as president of the US in January.

New Delhi had signalled early willingness to engage, with Prime Minister Narendra Modi's visit to the US in February and the proposal of a Bilateral Trade Agreement. The potential agreement, seen as a safeguard for India's exports against Trump's tariffs, was launched immediately with the aim of concluding an early harvest deal by the fall of 2025.

On Apr. 2, the Trump administration unveiled reciprocal tariffs and announced a blanket 10% tariff on imports from all countries. That same week, India and the US also finalised the terms of reference for the potential deal.

But even after five rounds of negotiations between March and July and Commerce Minister Piyush Goyal's two visits to the US between March and July, the trade talks hit a stalemate. According to the Indian government, the US wanted access to India's politically and socially-sensitive farm and dairy sector under the trade deal. Washington wanted to push genetically-modified crops and dairy products into India. New Delhi was unwilling to yield to these demands.

Eventually, in August, the White House did not just impose 25% reciprocal tariffs, but also slapped a 25% punitive duty on India-origin goods as a penalty for New Delhi's strategic partnership with the Kremlin and India's high crude oil imports from Russia. As of now, almost 55% of India's export basket to the US now attracts higher tariffs.

The White House also cancelled the sixth round of negotiations that were scheduled to begin Aug. 25 in New Delhi. Meanwhile, the US president as well as his officials, including Commerce Secretary Howard Lutnick, expressed displeasure over India's protective stance for its farm sector. In his latest interview just last week, Lutnick said that India sells everything to the US but wouldn't lower its tariffs on a bushel of corn from the US.

Even as tariffs bit into Indian industry, backchannel diplomacy revived. On Wednesday, Trump declared on Truth Social that negotiations with India were continuing, and Modi welcomed the announcement with a social media post on X.

India's chief negotiator for the trade deal, commerce ministry's Special Secretary Rajesh Agrawal, and US Trade Representative for South and Central Asia Brendan Lynch have sat down for in-person talks for the first time Tuesday since the imposition of extra tariffs. But until the White House withdraws the 25% punitive tariffs, any progress on the trade deal is unlikely, according to the think tank Global Trade Research Initiative.

For now, the US tariffs cast a long shadow on nearly $50 billion worth of Indian goods to the US from labour-intensive sectors such as chemicals and fertilisers, textile and apparel, gems and jewellery, shrimp and seafood, furniture and beddings, and machinery and mechanical appliances. In 2024-25 (Apr-Mar), India exported $86.51 billion worth of goods to the US and had a trade surplus of $40.82 billion.

Whether Tuesday's meeting leads to a compromise or more confrontation remains to be seen, and will define India–US trade in Trump's second term.  End

US$1 = INR 88.05

Reported by Krity Ambey

Edited by Ashish Shirke

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