Beyond Handshakes: Why a Comprehensive India-US Trade Deal Remains Elusive

What is the current state of India-US trade talks?

As of October 2026, formal negotiations for a comprehensive India-US Bilateral Trade Agreement (BTA) are effectively stalled. While both countries agreed to an interim trade deal framework in February 2026, subsequent developments have eroded the basis for that agreement. Last week, Finance Minister Nirmala Sitharaman stated that the talks had reached a “plateau” where further compromise was difficult. This sentiment was echoed by United States Trade Representative Jamieson Greer, who noted a deal was in its final stages but “not imminent.” The current situation is best described as a suspended animation, where both sides manage existing trade flows and irritants without a clear path toward a broader pact. Despite the stalemate, bilateral trade remains robust, exceeding $140 billion in the fiscal year 2025-26, with India recording a trade surplus of $33.8 billion (Source: The Hindu).

What are the primary sticking points for India?

New Delhi’s primary concerns revolve around the perceived unilateralism and unpredictability of American trade policy. There are three main areas of contention. First is the issue of tariff certainty. Indian policymakers are wary of making significant concessions, such as opening up sensitive agricultural and dairy markets, without a guarantee that the U.S. will not impose new tariffs on other grounds. The Trump administration’s dispute with Canada despite the existence of the United States-Mexico-Canada Agreement (USMCA), signed in 2020, is often cited as a cautionary tale. According to an official aware of the negotiations, there is “uncertainty even after signing a deal,” which makes India hesitant to commit to irreversible market-opening measures.

Second, recent U.S. legislative actions have directly targeted India’s strategic interests. The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed on September 18, 2026, authorises tariffs of up to 100% on major buyers of Russian energy. This is seen in New Delhi as a tool to pressure India into reducing its Russian oil imports. Ajay Srivastava, founder of the Global Trade Research Initiative, noted that while the U.S. granted a tariff pause to China under the extended Busan Agreement, India remains exposed. He pointed out that in July 2025, Washington imposed an additional 25% tariff on India for buying Russian crude while sparing China, suggesting the “tariff threat appears aimed at forcing India to cut Russian oil purchases and sign a deeply unequal bilateral trade agreement.”