ECONOMY & BUSINESS
India and the United States are seeking a deeper economic partnership, but negotiations over a bilateral trade agreement reveal how difficult it is to reconcile national interests. Disagreements over tariffs, agricultural protection, market access and India’s Russian oil purchases have placed commercial priorities alongside questions of energy security and strategic autonomy. The article examines why two increasingly important strategic partners still struggle to reach a trade deal, and why a durable agreement will depend on balancing economic opportunity with domestic and geopolitical interests.
INDIA–US TRADE: WHEN STRATEGIC PARTNERS CANNOT AGREE ON BUSINESS
India and the United States rarely describe their relationship today without using words such as strategic, consequential or indispensable. The two countries cooperate in defence, critical technologies, energy and the Indo-Pacific, while American companies increasingly view India as an important market and manufacturing base. Indian businesses, meanwhile, regard the United States as one of their most valuable export destinations. Yet when the conversation turns from strategic partnership to the detailed business of tariffs, agriculture, energy and market access, agreement becomes considerably harder.
That contradiction has returned to the foreground after another round of negotiations over the proposed India–US Bilateral Trade Agreement. US Trade Representative Jamieson Greer said on 1 October that negotiations were continuing but an agreement was not “imminent”, even after what he described as constructive discussions with Indian Commerce and Industry Minister Piyush Goyal. Greer said the two sides had identified the remaining sticking points and were working through them.
The remarks came shortly after Prime Minister Narendra Modi and US President Donald Trump spoke by telephone and reviewed cooperation in trade, defence, energy and critical technologies. Goyal, who travelled to the United States for talks and the G20 Trade Ministers’ meeting in Milwaukee, presented the negotiations more positively, seeking the early conclusion of what India describes as a balanced and mutually beneficial interim agreement.
The difference in tone is revealing. India and the United States clearly want an agreement, and neither side appears ready to abandon the negotiations. The difficulty lies in determining what each is prepared to concede in order to obtain a deal that can be defended economically and politically at home.
A DEAL THAT HAS ALREADY COME A LONG WAY
The current negotiations did not begin from scratch. India and the United States announced a framework earlier in 2026 and have spent months attempting to convert political understanding into a workable commercial arrangement. The February understanding was presented as an effort to lower tariff and non-tariff barriers and expand opportunities for businesses and producers in both countries.
Negotiations continued through the year. Greer travelled to New Delhi in June to meet Goyal and other senior Indian officials over the interim agreement and the broader bilateral trade negotiations. By late September, Goyal’s latest US visit was intended to advance the Bilateral Trade Agreement and work towards an interim deal based on the framework already established.
This explains why the latest delay should not automatically be interpreted as a breakdown. Trade negotiations often become hardest precisely when many of the easier questions have already been settled. What remain are usually the politically sensitive issues that neither government can concede without consequences at home. One assessment of the negotiations captures the difference in perspective particularly well: India appears to be concentrating on the issues already resolved, while Washington is focusing on those that remain. Both assessments can be true simultaneously.
AGRICULTURE IS ABOUT MORE THAN TARIFFS
Among India’s most difficult negotiating areas is agriculture. For Washington, greater access to India’s enormous consumer market offers obvious commercial opportunities. For New Delhi, however, agricultural liberalisation cannot be approached simply as a question of lowering import duties.
Agriculture in India supports millions of livelihoods and remains politically sensitive in ways that differ substantially from many advanced economies. Decisions affecting imported agricultural products can influence farmers, rural employment, food prices and domestic politics. The Indian government therefore has strong reasons to proceed cautiously when negotiations involve market access in sensitive agricultural sectors.
Protection of politically important parts of agriculture remains one of New Delhi’s principal priorities. This does not mean agricultural trade cannot expand. It means that an agreement requiring India to expose vulnerable sectors rapidly to international competition could carry domestic costs far greater than the tariff numbers themselves suggest. India is consequently likely to distinguish between areas where increased imports are commercially manageable and those where food security or farmer livelihoods make liberalisation politically difficult.
For Washington, however, meaningful access to Indian agriculture can be an important measure of whether a trade agreement is genuinely reciprocal. The same issue can therefore appear as protectionism from one negotiating table and livelihood protection from the other. Finding a compromise requires more than simply deciding what tariff percentage should appear beside a particular product.
INDIA WANTS A COMPETITIVE AMERICAN MARKET
India’s own demands are equally commercial. New Delhi wants tariff conditions that allow Indian products to compete effectively in the United States, particularly against exporters from other Asian economies.
The American market matters enormously to Indian businesses. Pharmaceuticals, smartphones and technology-related products are significant components of the trade relationship. Substantial categories of Indian exports, including generic pharmaceuticals and smartphones, have also received different tariff treatment from some of the broader duties imposed on Indian goods.
For exporters, however, the issue extends beyond the tariff applicable on a particular day. Businesses make investment and sourcing decisions over years rather than weeks. Uncertainty about future tariffs can therefore be almost as troublesome as the tariff itself. Manufacturers deciding whether to expand Indian capacity need to know whether goods produced in India will enjoy competitive access to American consumers.
That gives New Delhi a strong incentive to seek durable tariff advantages rather than merely obtain a politically attractive announcement. The negotiation is consequently about more than reducing duties. India wants predictability, while businesses want to know the conditions under which they will trade, whether those conditions can survive geopolitical disagreements and whether Indian goods will remain competitive with products manufactured elsewhere in Asia.
RUSSIAN OIL HAS ENTERED THE TRADE NEGOTIATION
The most difficult complication is that India–US trade negotiations can no longer be separated neatly from geopolitics. India’s continued purchases of Russian oil remain a significant source of disagreement, with Washington connecting commercial pressure to its wider effort to constrain Russian revenues. New Delhi, in contrast, has consistently presented its energy purchases as decisions driven primarily by national energy security.
The dispute has raised the possibility of substantial American tariff penalties connected to purchases of Russian energy, making oil one of the uncertainties hanging over the broader trade negotiations. For India, this creates a difficult strategic calculation. The country wants closer economic relations with the United States, but it also wants to preserve the ability to obtain energy from sources that serve its economic requirements.
Energy is not an abstract foreign-policy question for India. As one of the world’s largest energy consumers, the country is highly exposed to fluctuations in global crude prices. Expensive oil affects inflation, transport, manufacturing costs, government finances and household budgets. New Delhi therefore regards access to competitively priced crude as part of economic security, particularly during periods of disruption or uncertainty in global energy markets.
Washington sees another dimension. Money paid for Russian energy has geopolitical consequences at a time when the United States is attempting to constrain Moscow’s ability to finance its military activities. The two governments are therefore looking at the same barrels of oil through very different lenses. Neither position is difficult to understand, but reconciling them within a trade negotiation is considerably more complicated.
TRADE POLICY IS BECOMING FOREIGN POLICY
The Russian oil dispute illustrates a much larger transformation in global commerce. Trade agreements were once discussed primarily through tariffs, quotas and market access. Increasingly, economic relationships are being judged through national security, supply-chain resilience, sanctions, technology controls, industrial capacity and geopolitical alignment.
The India–US negotiations are therefore taking place within a trading system very different from the one that existed a decade ago. Washington has become increasingly willing to use tariffs and other commercial instruments as strategic leverage. India, meanwhile, is pursuing closer relationships with the United States and other Western economies while retaining what it regards as strategic autonomy in foreign and economic policy.
These approaches can coexist when interests overlap. They become more difficult when Washington expects commercial preferences to be accompanied by policy choices that New Delhi considers restrictive. India wants the benefits of deeper economic integration with the United States without necessarily accepting that every commercial advantage should require alignment with American foreign-policy priorities.
That is one reason the final stage of the trade negotiation is so important. The eventual agreement will reveal whether India and the United States can build a deeper economic relationship while accepting that strategic partners do not necessarily make identical geopolitical choices.
THE TARIFF QUESTION HAS BECOME MORE COMPLICATED
Tariffs themselves remain central to the negotiations, but even here the landscape has changed repeatedly. Earlier punitive US duties connected to India’s Russian oil purchases, subsequent adjustments and the continuing possibility of renewed tariff pressure have made the commercial environment more difficult to predict.
Separately, Washington has used trade investigations to examine practices involving India and numerous other economies. These processes can potentially create additional tariff pressures even while bilateral negotiations seek to reduce trade barriers.
The overlapping measures matter because businesses do not experience trade policy as separate diplomatic files. A manufacturer sees the total cost of exporting. If one agreement lowers a tariff while another investigation creates the possibility of additional duties, commercial uncertainty remains.
A successful bilateral agreement will therefore need to deliver more than a headline tariff reduction. It must create sufficient predictability for companies to make long-term decisions about factories, sourcing, investment and supply chains. The durability of the rules may ultimately matter as much as the percentage points removed from individual tariffs.
THE LIMITS OF STRATEGIC FRIENDSHIP
India and the United States have compelling reasons to deepen their economic relationship. Their strategic interests overlap in several important areas, their technology sectors are increasingly interconnected and both countries have reasons to diversify supply chains. Yet strategic friendship does not eliminate economic competition.
American negotiators are expected to obtain better conditions for American producers. Indian negotiators are expected to defend Indian exporters, businesses, farmers and consumers. Neither government can return home and credibly present an agreement as successful if the domestic political perception is that it conceded too much.
This reality is sometimes obscured by the warmth surrounding summit diplomacy. Meetings between national leaders can establish direction, accelerate negotiations and remove political obstacles, but they cannot make difficult economic interests disappear. The Modi–Trump conversation and the Goyal–Greer discussions are therefore significant, but political goodwill alone cannot determine agricultural tariffs, energy choices, market-access rules or the treatment of sensitive industries.
Trade agreements are ultimately built through detailed compromises. The strength of the political relationship can help negotiators reach them, but it cannot eliminate the interests that made the compromises necessary in the first place.
WHAT INDIA CANNOT EASILY CONCEDE
New Delhi’s negotiating position rests on several overlapping considerations. It wants improved access for Indian exports, competitive tariff treatment relative to rival manufacturing economies and sufficient certainty to encourage investment in India as a global production base.
At the same time, it has strong incentives to protect vulnerable agricultural interests and retain flexibility over energy procurement. It is also unlikely to welcome a trade framework that effectively converts preferential market access into a requirement for automatic alignment with every American geopolitical priority.
That does not make India unwilling to compromise. Trade agreements are built on compromise, and both sides have already demonstrated a willingness to negotiate difficult issues. But there is a difference between making commercial concessions and accepting constraints that a government believes could reduce its freedom to respond to future economic or strategic circumstances.
For India, this distinction goes to the heart of strategic autonomy. New Delhi wants a closer relationship with Washington, but it also wants that relationship to leave room for independent decisions when Indian and American interests do not completely coincide.
WHAT WASHINGTON NEEDS FROM INDIA
The United States faces its own political constraints. An agreement cannot simply provide Indian exporters with improved access to the American market while offering little additional opportunity to US businesses.
Washington wants greater reciprocity, fewer barriers and commercially meaningful access to India’s rapidly expanding market. Agriculture is important, but the broader discussion also encompasses industrial goods, regulatory barriers, digital commerce and other areas affecting American companies.
The American position has consistently emphasised opening India’s market further to US producers while creating opportunities for workers and businesses in both countries. The Trump administration’s broader approach to trade also places considerable emphasis on reciprocal treatment and reducing what Washington regards as unfair commercial imbalances.
That makes the political presentation of any India agreement particularly important. The White House will want to demonstrate that concessions granted to New Delhi produced measurable benefits for American businesses, producers and workers. New Delhi will need to demonstrate exactly the opposite side of the same bargain: that concessions made to Washington secured worthwhile advantages for India.
Both sides therefore need an agreement they can present domestically as a success. That requirement is one reason the final stage of a negotiation can become the hardest.
WHY FAILURE WOULD COST BOTH COUNTRIES
A delayed agreement is manageable. A prolonged breakdown would be more consequential. India is seeking to position itself as an important alternative manufacturing and supply-chain location at a time when companies are reconsidering excessive dependence on individual countries. Preferential and predictable access to the American market would strengthen that proposition.
For the United States, deeper commercial integration with India offers access to a huge and growing consumer market while supporting the diversification of global supply chains. It can also strengthen a strategic relationship that Washington considers increasingly important in the Indo-Pacific and in emerging technologies.
Failure would not necessarily destroy bilateral relations. India and the United States cooperate across too many areas for one trade disagreement to define the entire partnership. But continued tariff uncertainty would limit one of the most promising dimensions of the relationship and could make businesses more cautious about investments that depend upon stable access to each other’s markets.
There is also a wider strategic issue. Governments cannot repeatedly describe economic partnership as central to their relationship while allowing major trade disputes to remain permanently unresolved. At some stage, diplomatic rhetoric has to be translated into a commercial architecture that businesses can actually use.
THE DEAL MAY BE DIFFICULT BECAUSE IT MATTERS
Greer’s statement that an agreement is not imminent should therefore be understood in context. It does not necessarily indicate that the negotiations are failing. It may instead reveal that the talks have reached the questions that genuinely matter.
India and the United States are not negotiating merely over a few tariff lines. They are attempting to reconcile different agricultural systems, domestic political constituencies, energy requirements, strategic priorities and approaches to economic sovereignty. The remaining disagreements are difficult precisely because they touch national interests that neither government can casually surrender.
A weak agreement could be concluded more quickly by avoiding the hardest questions. A durable agreement requires confronting them. The challenge for Washington and New Delhi is to determine where commercial reciprocity ends and strategic autonomy begins, where legitimate domestic protection becomes an unreasonable trade barrier, and how much geopolitical alignment should be expected in exchange for economic preference.
The difficulty of reaching agreement may therefore say something positive as well as negative about the relationship. The negotiations matter because the economic relationship itself has become important enough for both governments to fight hard over its terms.
BEYOND THE SIGNATURE
India and the United States have considerable incentives to find a compromise. The economic logic of a deeper relationship remains powerful, and both governments continue to negotiate rather than walk away. The latest discussions demonstrate that the disagreement is over the terms of the relationship rather than whether a stronger economic relationship is desirable.
The significance of any eventual agreement, however, will depend less on how quickly it is announced than on what it actually resolves. A deal that produces an impressive political ceremony but leaves businesses exposed to recurring tariff uncertainty would achieve less than one that takes longer to negotiate but establishes dependable rules.
For India, success would mean better and more predictable access to the American market without sacrificing essential agricultural interests, energy security or excessive policy autonomy. For the United States, success would mean meaningful access to India and a more reciprocal commercial relationship capable of supporting broader strategic cooperation.
That is why a trade deal between two countries that increasingly call each other strategic partners can still be extraordinarily difficult to conclude. Friendship creates opportunity, but it does not erase national interest. In some respects, the maturity of a partnership is demonstrated not by the absence of disagreement but by whether disagreements can be managed without undermining the larger relationship.
The real measure of the India–US economic partnership will therefore not be whether the two governments always agree. It will be whether they can construct rules strong enough to allow trade, investment and strategic cooperation to grow even when they do not.