Trade negotiations between India and the United States have reached an impasse, with Finance Minister Nirmala Sitharaman acknowledging on Monday that further concessions may be increasingly difficult. This marks the strongest public indication from New Delhi that discussions on critical issues have stalled in the long-running effort to finalize a bilateral trade agreement aimed at enhancing economic ties and resolving complex market access challenges.
Sitharaman explained that the talks have reached a stage where additional compromises would be “very, very difficult” for both countries due to limited flexibility. Speaking at an event in New Delhi, she described the negotiations as intense and hard-fought but confirmed that discussions are ongoing.
In a significant development, the scope for a final agreement has narrowed following US President Donald Trump’s enactment of a congressional bill granting him the authority to impose tariffs of up to 100% on countries importing substantial volumes of Russian oil, including India and China. As the world’s third-largest oil importer, India is among the top buyers of Russian oil, a factor that has helped Moscow endure extensive Western sanctions since its full-scale invasion of Ukraine in 2022.
The potential imposition of new US tariffs has placed Indian Prime Minister Narendra Modi in a difficult position regarding energy policy. Reducing Russian oil imports could lead to higher fuel prices or strain government finances, while continuing such purchases risks damaging exports to India’s largest trading partner. India has also cautioned that these US measures could negatively impact bilateral relations.
Last week, US Trade Representative Jamieson Greer indicated that a trade agreement is not imminent following his meeting with Indian Trade Minister Piyush Goyal in the United States. Sitharaman highlighted that the trade balance favors India, with the deficit lying on the US side, noting Washington’s interest in reducing this imbalance.
The United States is India’s top export market, with shipments increasing to $42.79 billion from April to August, up from $40.39 billion during the same period last year, based on the latest Indian official data. Earlier reports suggested that India has held out for a more favorable deal, while the US has pushed for greater concessions.
Ajay Srivastava, founder of the New Delhi-based think tank Global Trade Research Initiative and a former trade official, argued that India should halt further concessions until the trade deal is finalized. Meanwhile, Sitharaman criticized the growing use of tariffs as a tool to address trade imbalances, describing it as the “weaponizing” of tariffs beyond their traditional role in negotiations.
She referenced India’s significant trade deficit with China, emphasizing that New Delhi prefers to resolve such imbalances through dialogue rather than unilateral measures. “I can take the same position, can I not, with China? It is so lopsided, it is terribly against me, but no, you can’t; you have to negotiate, you have to give and take,” she stated.
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