US and Indian trade negotiators opened two days of discussions on Wednesday as both sides seek progress toward a long-delayed agreement, de...
The United States introduced 50% duties on most Indian goods in August, arguing that India’s import of discounted Russian crude was helping fund Moscow’s war in Ukraine.
Deputy US Trade Representative Rick Switzer’s visit comes just a week after Indian Prime Minister Narendra Modi hosted Russian President Vladimir Putin in New Delhi. India’s foreign ministry, however, described Switzer’s trip as “familiarisation meetings.”
India was among the early countries to begin trade negotiations after former US President Donald Trump rolled out sweeping global tariffs, but it remains one of the few major economies yet to reach a deal—raising risks for jobs, exports and overall economic growth.
What’s at stake
India, the world’s fastest-growing major economy, recorded a $45.8 billion goods trade deficit with the United States in 2024.
Although key export sectors like smartphones and generic pharmaceuticals are exempt from US tariffs, labour-intensive industries—including textiles, seafood, and gems & jewellery—are facing severe pressure.
Exports to the US plunged nearly 12% year-on-year in October, with some categories seeing declines of 37–60% between May and September, according to the Global Trade Research Initiative (GTRI).
The fallout is rippling through financial markets as well: foreign investors have pulled out over $16 billion from Indian equities this year, contributing to the rupee sliding past 90 per dollar to a record low.
The International Monetary Fund has also trimmed India’s 2026–27 growth forecast from 6.4% to 6.2%, assuming the US tariffs remain in place.
GTRI estimates that India’s total exports could fall to $49.6 billion this fiscal year from $86.5 billion last year, potentially shaving up to 80 basis points off GDP growth.
The role of Russian oil
India enthusiastically bought discounted Russian crude after the 2022 invasion of Ukraine as Moscow was hammered with severe sanctions including on its sale of oil.
But Trump's decision to link trade policy to geopolitics upended US-India relations in August, with roughly half of the tariff burden stemming from Washington's attempt to penalise those purchases.
The US president has repeatedly claimed India either plans to stop, or has already mostly stopped, buying Russian oil -- a claim New Delhi has neither confirmed nor denied.
But when in the Indian capital, Putin offered to "continue uninterrupted shipments of fuel". Modi did not comment directly on oil flows.
However, top buyer Reliance Industries said in November it stopped importing Russian oil for its export-focused refinery, while smaller refiners like HPCL-Mittal Energy have said they have stopped entirely.
Analysts at trade intelligence platform Kpler expect a "notable dip" in India's December–January imports.
Whether that decline will sway Washington is unclear.
Other issues
Talks also stalled over agriculture, with India resisting pressure to cut tariffs on staples like rice and wheat -- wary of angering its farmers, a politically powerful constituency.
A senior Indian commerce ministry official told AFP that these issues are "largely resolved", although Trump on Monday also criticised the country for "dumping" rice into the United States.
Negotiating a trade pact is complicated by the need to address Trump’s so-called reciprocal tariffs, though both tracks are linked, officials say.
"These are two separate, parallel negotiations that are going on, but one will feed into another," Commerce Secretary Rajesh Agrawal told an industry event last week.
Is a breakthrough likely?
Relations have improved since August, with several smaller deals advancing.
That includes US approval in November for two arms sales worth nearly $93 million, and New Delhi's "significant" deal for the United States to supply nearly 10 percent of its liquefied petroleum gas (LPG) imports.
Energy commitments have anchored past US trade deals, and experts say the LPG contract may help convince Washington that India is reducing its reliance on Russia.
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