India appears increasingly confident in its trade negotiations with the United States, choosing to delay an interim trade agreement rather than accept terms it considers unfavourable. A combination of resilient exports, easing oil prices, fresh trade partnerships and a stronger domestic political position has strengthened New Delhi's negotiating leverage, even as the risk of higher US tariffs looms over Indian exports.
The prolonged negotiations mark a shift from earlier expectations that both countries would conclude a limited trade agreement before the United States introduces a fresh round of tariffs later this month.
Trade discussions intensified during US trade representative Jamieson Greer's visit to New Delhi last month, but both sides failed to bridge key differences.
According to sources, India is unwilling to sign an agreement unless it secures meaningful commercial advantages over competing exporters such as China. New Delhi is also seeking assurances that Washington will not impose additional tariffs after any agreement is concluded.
Agriculture remains another major sticking point. India continues to resist opening up its politically sensitive farm sector, a position that has shaped its trade negotiations for decades.
The United States, meanwhile, expects India to make wider market access concessions before offering preferential treatment.
The negotiations have gained urgency because the Trump administration is preparing another round of tariffs expected to take effect later this month.
At present, most Indian exports entering the US attract a 10 percent tariff. Washington is considering steeper duties under investigations linked to industrial overcapacity, while separate proposals could impose tariffs of up to 12.5 percent on imports from several countries, including India, over concerns related to forced labour in supply chains.
A delay in reaching an agreement could therefore expose Indian exporters to higher duties and prolong uncertainty for businesses dependent on the American market.
Despite the differences, officials on both sides continue to indicate that negotiations remain active, although no timeline has been set for a final agreement.
India's stronger economic performance appears to have reduced the urgency to conclude a quick deal.
Merchandise exports during the April-June quarter reportedly rose by around 15 percent compared with the previous year, despite disruptions caused by geopolitical tensions in West Asia. Higher petroleum prices supported export earnings, while shipments to Gulf countries recovered after temporary disruptions to shipping routes.
Exports to the United States also registered modest growth during April and May, suggesting that demand has remained resilient despite trade uncertainty.
A weaker rupee has further improved the competitiveness of Indian exporters.
India has simultaneously accelerated trade engagement with other major economies, reducing its dependence on the American market.
The free trade agreement with the United Kingdom is expected to come into force this month, while negotiations with the European Union are progressing towards a possible agreement early next year.
These parallel initiatives give Indian negotiators greater flexibility, as improved market access elsewhere reduces the pressure to accept unfavourable US terms.
Trade analysts believe India's expanding global partnerships have strengthened its bargaining position in the current negotiations.
Another factor working in India's favour is the recent decline in crude oil prices following easing tensions between the United States and Iran.
Lower energy prices improve India's trade balance, reduce imported inflation and strengthen macroeconomic stability.
Global investment banks have responded by raising India's economic growth projections while lowering inflation and current account deficit estimates. The improved outlook provides policymakers with greater confidence to negotiate without immediate economic pressure.
Recent electoral successes for Narendra Modi's government have also strengthened New Delhi's confidence, allowing policymakers greater room to resist external pressure for a rapid agreement.
At the same time, India is closely watching legal challenges in the United States against some of the Trump administration's proposed tariff measures. If parts of the tariff programme face judicial or political hurdles, New Delhi's negotiating position could strengthen further.
India's strategy reflects a broader shift from seeking quick trade wins to negotiating from a position of greater economic confidence.
The government appears willing to accept short-term uncertainty if it believes a delayed agreement could secure more favourable market access and stronger long-term protections for Indian exporters.
Whether this strategy succeeds will depend largely on Washington's willingness to soften its tariff stance. Until then, businesses on both sides will continue to face uncertainty as one of the world's most strategically important trade negotiations enters a more difficult phase.
