India Demands Tariff Rollback for Trade Deal with US

The India-US trade deal is unlikely to shape up anytime soon, with Trump’s oil-linked tariffs being a major roadblock. Indian officials have signaled they won’t negotiate unless 25% tariffs are lifted. Global Trade Research Initiative (GTRI) believes there is no quick solution despite trade talks resume in New Delhi. The US delegation, led by Assistant USTR for South and Central Asia Brendan Lynch, is currently meeting Indian counterparts for further productive talks. 

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"This is not an official round of negotiations but it will definitely be a discussion on the trade talks and on trying to see how we can reach an agreement between India and the US," Rajesh Agrawal, who is leading the discussions on India's behalf, told local media ahead of meeting Lynch.


Key Takeways from GTRI Report


Trade talks between India and the United States are back on track with officials meeting for negotiations in New Delhi, today. However, the India-based trade-focused think tank, GTRI has argued that any deal between the nations is unlikely unless Washington shows enough flexibility. Any progress on the India-US trade deal largely depends on Russian oil-linked additional 25 per cent duty on India.

"Negotiations will remain slow unless Washington signals genuine flexibility," the GTRI report mentioned.

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According to GTRI, “the US looks desperate to close a trade deal with India, even as its officials almost daily use disparaging language against New Delhi from public platforms”.

The GTRI report also suggested: "India, in the meantime, should formally record its objections, potentially through an amicus curiae brief at the US Supreme Court to support US businesses challenging the tariffs and keep the negotiation window open".

"The challenge will be how much India concedes without undermining regulatory autonomy or economic sovereignty," it added.


Proposal for BTA

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India and the US started a balanced and mutually beneficial Bilateral Trade Agreement (BTA) in March this year, with an aim to complete the first stage of the Agreement by October-November 2025. The interim trade deal didn’t bring significant conclusion, one major reason being India’s firm stance on agricultural and dairy sectors.


Focus on Agriculture and Dairy Sector

Agriculture and dairy have always been critical for India, as these two sectors provide livelihood opportunities to a large portion of people. GTRI suggested that “India must hold firm on agriculture and dairy, which it views not as trade issues but livelihood concerns for several hundred million farmers”.

The US President Donald Trump imposed an additional 25 per cent tariff on Indian goods from August 27 for "purchasing Russian oil" on top of the 25 per cent reciprocal tariffs already in place since August 7. Since that time, no trade talks have been conducted between the two nations.

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One round of negotiation talk was called off last month following Trump's additional tariff announcement and India's refusal to discontinue Russian oil purchase. However, officials from Trump administration have sounded more conciliatory, confirming the scope to restart trade talks.