India-US trade negotiations have once again run into a difficult phase, leaving businesses and exporters without clarity on the tariff regime that will eventually govern trade between the two countries.
Months after New Delhi and Washington agreed on a framework that lowered punitive US tariffs on most Indian goods, a comprehensive bilateral trade agreement remains unfinished. Fresh tensions over India's Russian oil purchases, uncertainty surrounding US trade investigations and disagreements over agricultural market access have narrowed the room for compromise.
The stakes are significant. The United States remains India's biggest export market, while any fresh tariff escalation could affect Indian exporters, financial markets and the rupee.
Both governments continue to engage, but officials have signalled that negotiations have reached a difficult stage.
Finance Minister Nirmala Sitharaman said earlier this week that the negotiations had reached a plateau, indicating that both sides have limited room to make further concessions. US Trade Representative Jamieson Greer has separately said that an agreement is not imminent, although discussions continue.
Several issues are holding up progress.
Russian oil has emerged as one of the biggest obstacles.
Washington has yet to provide clarity on the eventual tariff treatment of Indian goods.
India is reluctant to open politically sensitive agricultural sectors.
A pending US trade investigation could result in additional tariffs.
Broader political tensions have complicated the negotiating environment.
India's continued purchase of Russian crude has become increasingly important to the trade negotiations.
A new US law gives President Donald Trump authority to impose tariffs of up to 100% on countries that continue to buy significant quantities of Russian oil. India, one of the world's largest crude importers, remains a major buyer of Russian supplies.
Washington wants New Delhi to substantially reduce those purchases, arguing that Russian oil revenues help Moscow finance the war in Ukraine.
India, however, has maintained that its crude sourcing decisions are based primarily on energy security and affordability for its population of more than 1.4 billion.
Russian crude became especially attractive to Indian refiners after the invasion of Ukraine because it was available at discounted prices. More recent disruptions in the Middle East have made energy security an even more sensitive issue for New Delhi.
Cutting Russian purchases sharply could expose India to higher oil costs. Continuing them, however, could raise the risk of tougher US tariffs.
Another major complication is an ongoing US Section 301 investigation linked to alleged excess industrial capacity in several countries. Washington is examining whether excess production and non-market practices abroad are damaging or undercutting American industries.
Until that process is completed, India has limited visibility on the tariffs its exports could eventually face.
That uncertainty makes New Delhi reluctant to offer further concessions without knowing what level of market access Indian exporters will ultimately receive.
The issue of excess industrial capacity has also become an important element of the Trump administration's broader trade policy, with Washington pushing other major economies to take stronger action against what it considers market-distorting production.
India and the US had agreed on a trade framework in February that reduced punitive tariffs on most Indian goods to 18%, from 50% imposed after an earlier round of negotiations collapsed.
The US Supreme Court subsequently invalidated Trump's use of emergency powers to impose sweeping global tariffs, resulting in a 10% baseline tariff.
But the lower baseline has not resolved the larger dispute.
India is still looking for a more stable and favourable tariff arrangement, particularly one that places its exporters on competitive terms with countries such as Vietnam and China.
Agriculture is another major sticking point. New Delhi is seeking to protect sectors that are economically and politically sensitive and affect millions of farmers and rural households.
India has resisted wider market-opening commitments covering areas such as:
dairy products
poultry
rice
wheat
other agricultural products
Washington has long sought greater access to India's large consumer market, including in agriculture.
India's position is that it needs greater certainty over US tariffs before making significant concessions in sensitive sectors.
The US is India's largest goods export market, making the outcome of the negotiations particularly important for Indian companies. Indian goods exports to the US increased to $42.79 billion during April-August 2026, from $40.39 billion in the corresponding period a year earlier. India recorded a trade surplus of nearly $34 billion with the US in 2025-26.
Some of India's largest export categories, including generic pharmaceuticals and smartphones, are currently outside the scope of the 10% US levy.
However, the absence of a permanent trade agreement leaves Indian exporters exposed to future policy changes.
A fresh increase in tariffs could:
make Indian products less competitive in the US market
squeeze margins of export-oriented companies
affect sectors dependent heavily on US demand
weaken investor sentiment
add pressure on the rupee
The Indian currency is already trading near record-low levels amid a strong dollar, elevated crude oil prices and global uncertainty.
The US is seeking a combination of trade and strategic concessions.
Its priorities include:
lower barriers for American products entering India
greater access to the Indian market
reduction of the US trade deficit with India
stronger action by India to reduce Russian oil purchases
The Trump administration has increasingly linked trade policy with strategic and geopolitical objectives, making the negotiations more complicated than a conventional tariff-cutting agreement.
New Delhi's priorities are different.
India wants:
predictable and competitive tariffs for its exports
protection for sensitive agricultural sectors
exemptions or waivers from punitive measures linked to Russian oil
clarity on the outcome of US trade investigations
a balanced agreement that does not require disproportionate concessions
The government is particularly cautious about making additional commitments before Washington provides greater certainty over the final tariff structure.
Trade disagreements are unfolding against a more difficult political backdrop. Relations between India and the US have faced several strains over the past year, including disagreements over geopolitical issues and India's rejection of Trump's repeated claim that he played a role in brokering a ceasefire between India and Pakistan.
Such tensions have made it harder to isolate trade negotiations from the broader diplomatic relationship.
Negotiations have not collapsed, and high-level engagement is expected to continue.
US Secretary of State Marco Rubio is expected to visit India later in October, potentially providing another opportunity to discuss bilateral concerns. Prime Minister Narendra Modi and President Donald Trump also remain in direct contact. The two leaders spoke on September 30 and are expected to review progress again as officials continue negotiations.
Modi is also expected to travel to the US in December for the G20 leaders' meeting, creating another possible opportunity for high-level intervention.
A rapid breakthrough appears unlikely unless the two sides resolve three core issues: Russian oil, agricultural market access and uncertainty over future US tariffs.
For India, the central challenge is to preserve access to its biggest export market without compromising energy security or opening politically sensitive sectors too widely.
For Washington, the question is whether trade concessions alone will be enough or whether progress will remain tied to India's broader strategic choices.
For now, negotiations are continuing — but the easier compromises appear to have already been made. The next stage will require political decisions at the highest level rather than merely technical negotiations between trade officials.