India, US talk trade again

New Delhi (TIP): Commerce minister Piyush Goyal and US trade representative Jamieson Greer this week resumed talks in New Delhi aimed at clearing the last hurdles to an interim trade agreement. An American delegation led by Greer also met finance minister Nirmala Sitharaman on the sidelines. US ambassador to India Sergio Gor called the discussions a move “decisively toward finalising a strong bilateral trade agreement”.
But this optimism isn’t new. Talks have cleared this stage before, only to be undone by the US Supreme Court’s ruling on tariffs. A look at how negotiations got here, what changed, and what remains unresolved.
Prime Minister Narendra Modi and US President Donald Trump met in Washington in February 2025 to discuss an interim bilateral trade agreement (BTA), which could pave the way for a comprehensive one, and set the ‘Mission 500’ target to double bilateral trade to over $500 billion by 2030, from about $200 billion. Even as the first face-to-face talks were launched in March 2025, the US on April 2 that year announced what it called “Liberation Day” tariffs – 10% baseline tariffs on all countries, plus country-wise additional tariffs. For India, the US decided on 25% reciprocal tariffs, and later in August imposed another 25% penalty tied to the country’s purchases of Russian oil. Together, US duty on Indian goods rose to as much as 50%. India called the penalty unfair and noted that larger Russian oil buyers, including China, faced no equivalent action.
At least five rounds of face-to-face talks and several virtual negotiations were held before the two sides on February 2, 2026, agreed on an interim deal, under which the US would bring down the 25% reciprocal tariff on Indian goods to 18%.
A framework for the interim deal was issued jointly on February 7. Under this, Washington agreed to cut the combined tariff on Indian goods from 50% to 18%, completely dropping the Russian oil penalty.
India committed to eliminating or reducing tariffs on US industrial goods and a limited range of farm products, including quota-based imports of dried distillers’ grains and red sorghum for animal feed, alongside a pledge to purchase $500 billion of US goods over five years.
The government also secured a commitment to “negotiated outcomes” on generic pharmaceuticals and ingredients, shielding them from blanket measures once a separate US investigation into pharma imports concluded. Sensitive sectors — wheat, rice, maize, soya, dairy, poultry and ethanol — were fully excluded.
The framework also built in a safeguard for exactly this kind of disruption: a rebalancing clause stating that “in the event of any changes to the agreed upon tariffs of either country, the United States and India agree that the other country may modify its commitments”. That clause has since become the basis for India’s position that the deal remains workable despite the upheaval.
The framework was a commitment, not yet legally ratified. A formal deal was expected by mid-March. But crucially, it gave India a competitive advantage against Vietnam, Bangladesh and China, with which Indian exporters typically compete.