Why the India–U.S. trade deal remains out of reach

Hopes for a comprehensive trade agreement between India and the United States have faded in recent months as geopolitical tensions, legal uncertainty in Washington and disagreements over tariffs continue to complicate negotiations. While both governments remain committed to strengthening economic ties, several major obstacles have delayed what was expected to become one of the world’s most significant bilateral trade agreements.

Russian oil remains a sticking point

One of the most politically sensitive issues concerns India’s continued imports of discounted Russian crude oil. Since Western sanctions were imposed following Russia’s invasion of Ukraine, India has become one of the largest buyers of Russian energy.

New Delhi argues that securing affordable energy supplies is essential for its economic growth and energy security. However, the issue has generated increasing concern in Washington, where some lawmakers believe closer trade relations should reflect broader strategic alignment.

Although the United States has largely avoided direct sanctions on India’s purchases, the issue continues to influence the political environment surrounding trade negotiations.

Tariffs and market access

Long-standing disagreements over tariffs remain unresolved. The United States is seeking greater access for agricultural products, medical devices and digital services, while India wants improved access for textiles, pharmaceuticals, engineering goods and professional services.

Digital trade has also emerged as a major point of contention, particularly regarding data governance, digital taxation and market regulation affecting American technology companies operating in India.

Agriculture remains especially sensitive, with both governments seeking to protect domestic producers while expanding exports.

Legal uncertainty in Washington

Negotiations have also been affected by ongoing legal challenges surrounding the U.S. administration’s trade authority. Court proceedings concerning tariff policies and executive trade powers have created uncertainty over how quickly Washington could implement any new agreement.

Trade officials on both sides are therefore proceeding cautiously until greater legal clarity emerges.

Strategic partnership continues

Despite the delays, India and the United States continue to deepen cooperation in defence, semiconductors, critical minerals, artificial intelligence and advanced manufacturing.

Both governments increasingly view their economic partnership as strategically important amid shifting global supply chains and efforts to reduce dependence on China.

Business leaders in both countries continue to support a comprehensive trade agreement that would provide greater certainty for investment and cross-border commerce.

Negotiations far from over

Trade experts believe a final agreement remains achievable, but only after political differences, tariff disputes and regulatory concerns are addressed.

Rather than signalling a breakdown in relations, the current delays reflect the complexity of negotiating a modern trade agreement between two of the world’s largest and fastest-growing economies.

For now, both New Delhi and Washington appear committed to continuing negotiations, even if a final deal takes considerably longer than originally anticipated.

Newshub Editorial | Asia – 26 June 2026