U.S. insistence on market access to agri and dairy remains the only major issue
By Kalyani Shankar
The long-awaited trade deal between the US and India is coming close. The US has indicated a potential reduction of the 50% tariff on Indian goods. President Donald Trump is expressing some flexibility on the matter. “We’re making a deal with India—it’s a much different deal than we had in the past. Right now, they might not love me, but they’ll love us again,” Trump said last week. Negotiations for the agreement have been ongoing for several months. Commerce Minister Piyush Goyal noted that a fair and balanced trade pact is under development and emphasised its significance for trade relations between the two countries.
India and the US trade about $125 billion each year. India exports $80 billion to the US and imports around $40 billion. This creates a trade deficit for the US.
In August, President Trump imposed a 50 per cent tariff on India, including a 25 per cent penalty on India’s Russian oil procurement, directly affecting trade dynamics and increasing economic pressure on Indian exports.
This pressure has prompted Indian enterprises, such as Reliance Industries, to reassess and modify their oil sourcing strategies, affecting their operations and trade flows.
In November 2025, US President Trump stated that the United States and India were nearing the conclusion of a trade agreement. He remarked that he would consider reducing the high tariffs now that India has cut its purchases of Russian oil. Furthermore, India has increased its imports of US crude oil and liquefied petroleum gas (LPG), thereby meeting its energy needs and demonstrating its support for Western sanctions. While several rounds of trade negotiations have occurred between the two countries, and the US has since softened its stance under Trump, hinting that Washington will reduce tariffs on India, which is what New Delhi wants.
President Trump recently remarked that India has reduced its crude oil imports from Russia due to US sanctions. He criticised New Delhi for imposing high tariffs on US imports while benefiting from low tariffs on its exports to the U.S. Trump stated, “India has significantly reduced its purchases of Russian oil,” and indicated his administration’s intention to “lower the tariffs.”
India’s resilient economy enhances its capacity to negotiate better trade terms. Additionally, NDA’s landslide victory in the recent Bihar elections gives the government greater leverage in negotiations.
Exports to the US dropped by 8.6% in October, down from a 12% decline in September. Exporters are making up for losses by diversifying their products and offering discounts. India is facing tougher competition from cheaper Chinese goods.
India and Russia continue to maintain robust trade relations across other areas, including fertilisers, coal, diamonds, and defence equipment.
Russia has historically been India’s largest oil supplier, accounting for over 35% of imports, and India and Russia aim to reach USD 100 billion in bilateral trade by 2030, exploring new payment methods outside SWIFT.
India’s largest conglomerate, Reliance Industries, owned by Mukesh Ambani, has ceased importing Russian crude oil for its export-only refining in Jamnagar, Gujarat. Indian state-run oil companies will import more liquefied petroleum gas (LPG) from the US each year. In return, Trump has removed tariffs on many agricultural products, which could help India.
India’s policy is “strategic autonomy,” pursuing energy based on affordability and security while managing its geopolitical interests. India’s Commerce Minister Piyush Goyal has highlighted the need for a “balanced, fair and stable” trade deal with the US.
India’s merchandise exports to the US declined 11.93% to $5.46 billion in September 2025, reflecting the impact of high tariffs imposed by Washington and emphasising recent trade tensions. A resilient Indian economy gives New Delhi the freedom to negotiate.
The United States plans to lower the 25% tariff on Russian oil imports from India to 15%. In response, India will reduce tariffs on over 80% of its goods while protecting key sectors such as agriculture.
India’s strong domestic economy and the smaller-than-expected decline in exports support its trade negotiations with the US. In October, exports to the US decreased by 8.6% year on year to $6.3 billion, reflecting the impact of recent US tariffs. This smaller decline maintains India’s leverage in ongoing negotiations.
India plays a key role in the US technology sector and has the skills for developing new technology products. With about 2,000 US companies and a strong market for US energy and defence equipment, India is ready for a trade deal. New Delhi may disapprove genetically modified maise, as farmer sensitivities are “still too strong.”Delhi should aim to secure the benefits of America as an export market by finalising a deal.
A favourable trade deal between the two countries would strengthen their political and economic relationship. More major state elections are due next year, including in West Bengal, Tamil Nadu, and Kerala — all states where farming lobbies are significant — followed by Uttar Pradesh in 2027. (IPA Service)
