India-US trade deal: India-US trade talks are back in view after Sergio Gor, the newly appointed US ambassador to India, said negotiations on a bilateral deal remain active, with another round possible this week. This is a status update, not a breakthrough. But in an environment shaped by tariffs, bruised egos, and strategic signalling, even continuity matters.
Washington has chosen political warmth amid economic friction. Responding to President Donald Trump’s off-hand remarks about Prime Minister Modi, Gor described India as Washington’s most essential partner this century. The language is deliberate. Trade disputes fluctuate. Strategic relationships cannot, especially with China’s shadow across supply chains and geopolitics.
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What is stalling the India-US trade deal
Gor was candid about the difficulty. India is large, politically complex, and not easily slotted into template agreements. Trade concessions are filtered through farmer interests, small manufacturers, and electoral arithmetic. Unlike smaller economies, India negotiates with an eye on policy space and long-term development.
Talks began in March last year and were expected to conclude by July. They did not. In August, Washington imposed a 50% tariff on several Indian exports, including a 25% duty tied to India’s purchase of Russian oil. For New Delhi, it underlined the limits of strategic insulation. For Washington, it was an assertion of “reciprocity” in an era where trade is increasingly coercive.
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A further constraint sits in Washington’s own institutional machinery. Any substantive trade deal with India runs up against the limits of US congressional authority. Trade Promotion Authority has lapsed, leaving the administration with little room to bind Congress on tariffs or market access. The United States Trade Representative can negotiate, but not guarantee ratification. This narrows ambition by default. Even where political intent exists, negotiators are forced into incrementalism. The bottleneck is not only political will or reciprocity rhetoric, but the absence of a clear legislative runway.
Politics then intruded further. Trump’s claim that he personally defused an India-Pakistan conflict irritated New Delhi. More recently, US commerce secretary Howard Lutnick suggested a deal failed because Modi did not call Trump. India pushed back publicly. The Ministry of External Affairs said the sides had been close to agreement more than once, signalling shared responsibility for the impasse.
The problem is not a single blockage but two mismatches. On the transactional side are tariffs, market access, digital trade rules, and agriculture. On the transformational side sit defence ties, technology cooperation, and supply-chain realignment. Gor’s point that trade is only one strand in a wider relationship is accurate. It also explains why progress has been uneven.
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Friendly gestures important
One near-term signal matters. India is expected to be invited next month as a full member of Pax Silica, a US-led effort to secure supply chains in semiconductors, AI, and critical minerals. This places India alongside Japan, South Korea, the Netherlands, and Australia. For New Delhi, it offers access to high-value manufacturing ecosystems it has long sought. For Washington, it embeds India deeper into a trusted technology network even as trade talks drag.
That said, unresolved disputes carry costs. Indian exports have taken a hit from higher tariffs as global demand softens. Smaller exporters have limited capacity to absorb the shock. In the US, frustration persists over India’s tariff structure, regulatory barriers, and protection of sensitive sectors. Domestic political pressure is visible on both sides.
The deeper reality is that both governments have embraced nationalist economic agendas. India is backing manufacturing through production-linked incentives while shielding vulnerable sectors. The US has revived its own “Make America Great Again” framing. In such conditions, a sweeping free trade agreement is unlikely. A narrower, staged arrangement that parks the hardest issues is the more plausible outcome.
Gor’s remarks reassure Indian policymakers that Washington remains invested, even as they signal to US audiences that reciprocity is being pursued. Any deal will depend less on rhetoric and more on restraint, incrementalism, and acceptance of constraints. Enduring relationships are built through compromise, not declarations.