On Thursday, October 1, Jamieson Greer, the United States Trade Representative (USTR), announced that discussions regarding a trade agreement between India and the United States have progressed to their concluding phase. However, he emphasized that the formal signing of the agreement is “not imminent” as both nations continue to address unresolved issues.
Greer’s remarks were unexpected, considering that earlier this year, in February, India and the US had reached a framework agreement. Officials from India’s Commerce and Industry Ministry had previously asserted that a deal was already in place, with India reportedly seeking more favorable tariff rates prior to finalizing the agreement.
Following a meeting with India’s Commerce and Industry Minister Piyush Goyal, Greer described the negotiations as productive, indicating that both countries are nearing the end of their discussions. “While I don’t foresee an immediate conclusion, we have clearly identified the key issues that need to be resolved. We are making significant efforts towards this goal. I anticipate that the President and the Prime Minister may have another conversation soon to evaluate our progress,” Greer stated during a press briefing.
In a related development, last month, US President Donald Trump enacted the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, which imposes tariffs of up to 100% on major purchasers of Russian energy, including India.
These newly proposed tariffs cannot be contested in court, unlike the previous tariff framework established under the International Emergency Economic Powers Act, which the US Supreme Court invalidated.
The sanctions concerning Russia have generated mixed reactions in India. In February, the US had agreed to eliminate an additional 25% tariff on Indian imports in recognition of India’s pledge to halt Russian oil purchases. India has also committed to negotiating comprehensive bilateral digital trade rules to address discriminatory practices and barriers in digital commerce.
In addition to the tariffs related to Russia, India is awaiting outcomes from a US investigation initiated under Section 301 of the Trade Act of 1974. This probe aims to determine if India’s industrial capacity is excessive and adversely affecting American businesses. The initial imposition of Section 301 tariffs resulted in a 10% levy.
With the anticipated implementation of new Section 301 tariffs, Indian exporters are reporting a shift in order dynamics, with US buyers reducing bulk orders and diversifying their sources of imports. This trend could lead to a decrease in export orders for Indian businesses until a trade agreement is finalized. Currently, top trading partners of the US are facing a tariff range of 10-15%, and India is seeking more advantageous rates compared to ASEAN nations and China.
Minister Goyal, while in the US, asserted that India’s manufacturing capabilities adequately meet both domestic and international demands and that the country does not possess structural excess capacity. He also highlighted that India shares concerns held by several G20 nations regarding trade-distorting support in certain countries that leads to dumping and predatory pricing, and that India addresses these issues through evidence-based WTO measures, including anti-dumping and countervailing duties.
According to the framework agreement, India had expressed its intention to purchase US products amounting to $500 billion over the next five years, covering sectors such as energy, aircraft, precious metals, technology, and coking coal. However, experts have noted the absence of any reciprocal commitment from the US to purchase Indian goods, resulting in an imbalanced agreement.
Furthermore, the US and India have committed to enhancing economic security collaboration to improve supply chain resilience and innovation, addressing non-market policies of third parties, and cooperating on investment reviews and export controls.
A trade expert, who preferred to remain anonymous, cautioned that if India is compelled to negotiate economic security provisions akin to those in various reciprocal trade agreements between the US and other nations, it could significantly undermine India’s autonomy in foreign policy, trade, and economic dealings.
The recent trade conflict between the US and Canada illustrates that American demands may extend beyond mere goods or digital trade. Canadian Prime Minister Mark Carney suggested that the US has pressured Canada to avoid agreements with China as part of a bilateral arrangement. Similarly, US demands from India may encompass broader issues beyond trade.
In an investment climate report issued last month, the US State Department pointed out that India’s Foreign Exchange Management Act (FEMA) imposes restrictions on concurrent foreign direct investment and foreign portfolio investment. This legislation creates cumbersome barriers that prevent independent funds within the same investment group from participating in initial public offerings.
Additionally, the report indicated that the effective tax rate for foreign banks operating in India is 4.63 percentage points higher than that for domestic banks, standing at 38.22%. This elevated tax burden might ultimately diminish India’s appeal as a market for foreign lenders, potentially affecting their decisions regarding capital allocation, pricing, and the scale of their local operations.
Ravi Dutta Mishra serves as a Principal Correspondent at The Indian Express, specializing in economic policy and financial regulations. With over five years of experience in business journalism, he focuses on the frameworks governing India’s commercial landscape.
His reporting expertise includes:
- Trade & Commerce: Analysis of India’s import-export trends, trade agreements, and commercial policies.
- Banking & Finance: Coverage of regulatory changes and policy decisions influencing the banking sector.
