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India-US Trade Deal Faces Delay as New Delhi Seeks US Policy Clarity

Negotiations between India and the US on a bilateral trade agreement are expected to miss the targeted fall deadline. New Delhi is demanding clarity on the US administration's tariff policies and how promised reductions will be implemented amid ongoing legal challenges. India is focused on securing market access, understanding US tariff resets, and protecting sensitive sectors, while service trade remains sidelined.

India-US Trade Deal Faces Delay as New Delhi Seeks US Policy Clarity

India-US Trade Pact Likely to Miss Fall Deadline

As India and the United States move forward with negotiations for a bilateral trade agreement, emerging reports suggest the deal may not be finalized by the anticipated fall deadline. Behind the scenes, New Delhi is seeking greater clarity from the US administration on its trade policies, particularly concerning tariffs imposed during President Donald Trump's tenure.

US Policy Ambiguity Stalls Progress

While negotiators aim to settle an "initial tranche" of the proposed trade pact by early July, Washington has yet to clearly define its trade stance beyond the existing Trump-era tariffs. A source familiar with the discussions remarked that for a lasting agreement, the US must move past ad hoc, case-by-case tariff decisions and establish a more consistent framework.

New Delhi is especially keen to understand how tariff reductions, pledged by the US Trade Representative, will be implemented and whether these require Congressional approval. Meanwhile, legal challenges to the Trump administration’s reciprocal tariffs continue to cloud the certainty around duty reductions, further complicating negotiations.

Key Areas India Is Watching Closely

Talks for a comprehensive India-US trade deal were set in motion following a summit between Prime Minister Narendra Modi and President Trump earlier this year. Initially, both sides targeted a fall deadline for finalizing the agreement. However, with developments like the suspension of new tariffs announced by the US in April, delays seem inevitable.

India’s negotiation team is concentrating on three critical factors during this process:

  • Market Access for Indian Businesses: New Delhi aims to secure advantageous terms that open up the vast US market for Indian companies in exchange for reducing tariffs on American goods in India.
  • Tariff Adjustments in the US: How the US resets its tariff structures in upcoming trade deals—such as those with the UK and China, which currently remain interim—will heavily influence India’s next steps.
  • Sectoral Protections: India is intent on safeguarding sensitive sectors, including agriculture and staples, ensuring that these areas receive sufficient protection in any agreed terms.

Services Sector Still on the Sidelines

Although the present discussions are primarily focused on trade in goods, Indian officials note that the service sector—an essential part of India’s economy—is not yet a prominent subject in these talks. This remains a crucial area for India to address moving forward.

Looking Ahead

In summary, while momentum exists for forging a robust India-US trade agreement, a combination of US policy uncertainties, tariff legalities, and sector-specific concerns have pushed back the timeline. Both nations continue to engage actively, but the path to a comprehensive, durable deal appears longer than initially anticipated.

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