India Holds Out for Better Trade Deal with the U.S.
New Delhi/Washington: India has decided not to rush into finalizing a trade agreement with the United States after recent talks. Prime Minister Narendra Modi feels confident as the country explores new trading partnerships and navigates economic challenges at home, according to officials and analysts.
During U.S. Trade Representative Jamieson Greer’s visit to New Delhi last month, negotiations did not result in a limited deal as many had hoped. An Indian government official noted that there was no agreement because the U.S. did not meet India’s main demands, including tariff advantages over countries like China and an absence of new American tariffs after the agreement.
“Our stance is clear—we won’t rush into a deal if it doesn’t come with favorable terms or if it compromises vital areas like agriculture,” the official stated.
The U.S. was eager for quick concessions from India as President Trump plans to introduce new tariffs that could take effect soon. India’s reluctance could result in higher tariffs for Indian exports, creating uncertainty for local businesses. Following discussions with Greer, Indian Trade Minister Piyush Goyal emphasized that a deal would only be signed if it ensured a competitive edge for India.
Currently, most Indian goods face a 10% tariff when entering the U.S., but the Trump administration is considering increasing tariffs following investigations into excess production capacity. India has denied U.S. claims regarding surplus capacity.
Washington believes that India needs to offer concessions to receive the trade benefits it seeks, according to a source familiar with the discussions. Both the Indian and U.S. officials involved have chosen to remain unnamed due to the confidential nature of the talks. The U.S. is optimistic about reaching an agreement but has not provided a specific timeline.
The White House has indicated that the Trump administration is still actively engaged with India to finalize what could be a groundbreaking trade deal.
India’s Strengthening Exports and Economic Plans
Amidst these discussions, India’s exports have shown improvement. According to recent reports, India’s overall goods exports rose by about 15% from the previous year between April and June, despite challenges from the ongoing conflict in Iran. Notably, exports to Gulf nations have rebounded, reaching $5.3 billion in May, compared to $2.62 billion in March, as traders found alternative shipping routes. Meanwhile, exports to the U.S. increased to $17.29 billion during April and May.
Additionally, India is expanding its access to other developed markets, with a free trade agreement with the U.K. expected to take effect this month and an agreement with the EU anticipated early next year.
Analysts believe India is in a favorable position regarding trade talks, bolstered by its strong economy and diversified partnerships worldwide. A recent peace agreement involving the U.S. and Iran has improved India’s economic outlook by lowering oil prices. Goldman Sachs has even raised its growth forecast for India, suggesting that the nation has the flexibility to wait for a more advantageous deal.
Strategic Calculations Amidst U.S. Trade Policies
India is also considering the possibility that some U.S. trade measures might face legal challenges. A coalition of 22 Democratic state attorneys general has already raised objections to the proposed tariffs related to forced labor investigations.
Trade experts note that the legal uncertainties surrounding U.S. tariffs and Modi’s recent electoral victories have empowered India’s ability to resist a hasty agreement. Leaders from Modi’s Bharatiya Janata Party have publicly stated that trade agreements must protect farmers and small businesses—two crucial voter bases that have historically received special considerations in negotiations.
Ajay Srivastava, a founder of the Global Trade Research Initiative and a former trade negotiator, remarked that India understands it might be more prudent to delay or even walk away from a rushed deal that could impose long-term costs exceeding any temporary relief from tariffs.
