India rejected a quick trade agreement with the United States in recent talks and is holding out for a better deal, even as U.S. tariffs loom and Prime Minister Narendra Modi draws confidence from new trading partners, eased economic risks and political gains at home. After months of talks, the two governments failed to finalise an interim trade agreement during U.S. Trade Representative Jamieson Greer’s visit to New Delhi last month. The much-advertised deal never quite made it off the table and onto paper.
The Bargain That Never Landed
There was no consensus because Washington did not offer assurances on New Delhi’s key demands: a tariff advantage over competitors such as China and no new U.S. levies after the deal, said an Indian government official aware of the talks. “Our position is clear - we don’t intend to rush into a deal that is not on favourable terms or compromise on red lines like ceding ground on agriculture,” the official said. That’s the language of sovereignty in a system where states haggle over who gets squeezed less, while farmers and workers sit underneath the table.
A day after talks with Greer, Indian Trade Minister Piyush Goyal said the U.S. deal would not be implemented unless an advantage is ensured, signaling New Delhi’s hardened position and lack of urgency despite the risk of higher tariffs. Like most countries, the bulk of goods from India currently face a 10% U.S. tariff. But the Trump administration is expected to introduce steeper tariffs later this month through probes into excess industrial capacity. India has denied U.S. charges of surplus capacity. Washington has already proposed new tariffs of up to 12.5% on dozens of nations, including India, over allegations they failed to curb trade in goods made with forced labour.
Tariffs, Leverage and the State Game
The U.S. view has been that India needs to earn the preferential treatment on trade provisions it has sought by making its own concessions, a U.S. source aware of the talks said. The Indian official and the U.S. source did not wish to be named as negotiations are confidential. The Indian trade ministry and the Office of the United States Trade Representative did not respond to emailed requests for comment. A U.S. official, speaking on condition of anonymity, said Washington remained engaged with India and still expected an agreement, but did not offer a timeline. The official however added India had at times been slow, bureaucratic and difficult in the negotiations, signaling that no quick deal was likely. Asked about the impasse, White House spokesman Kush Desai said: “The Trump administration continues to productively engage with Indian officials to finalise a historic trade deal that puts Americans and America First.”
That’s the whole ritual in miniature: one state demanding concessions, another refusing to blink, and both dressing the contest up as public interest. The people who actually absorb the costs don’t get a seat at the table. They get tariffs, price shifts and the cheerful language of “historic” deals.
Rising exports, new trade deals with other countries and blocs and eased economic risks have strengthened India’s hand, trade analysts said. In April-June, India’s overall goods exports rose about 15% from a year earlier despite disruptions from the war on Iran, buoyed by pricier petroleum shipments, officials said. Exports to Gulf countries have recovered to pre-war levels, rising to $5.3 billion in May from $2.62 billion in March as traders shifted to alternative shipping routes, while exports to the United States edged up to $17.29 billion during April and May. India is also broadening access to other developed markets, with a UK free trade pact set to take effect this month, and an EU agreement expected by early next year.
Who Gets Leverage, Who Gets Squeezed
Wendy Cutler, senior vice president at the Washington-based Asia Society Policy Institute, and a former U.S. trade official, said, “Indian negotiators have gained some leverage in the talks, given its strong economy, diversification initiatives with other partners, and its strategic standing in the world.” Goldman Sachs economist Santanu Sengupta said in a report that the interim U.S.-Iran peace deal improved India’s economic outlook by easing oil prices. The bank has raised its 2026 growth forecast for India to 6.8%, and lowered its inflation and current-account deficit estimates, suggesting New Delhi has more economic room to hold out for better terms. A weaker rupee has also improved exporters’ competitiveness.
India is also calculating that some U.S. trade measures could face legal or political setbacks, another Indian official said. A group of 22 Democratic state attorneys general have already filed objections to the Trump administration’s proposed tariffs from probes into forced labour. Trade analysts said legal uncertainty over U.S. tariffs, combined with Modi’s recent state election victories, have helped India resist a rushed deal. Senior leaders of Modi’s Bharatiya Janata Party have argued publicly that trade agreements should protect Indian farmers and small businesses, two politically influential constituencies that New Delhi has long shielded in trade negotiations.
Ajay Srivastava, founder of the Global Trade Research Initiative, and a former trade negotiator, said, “India realises that delaying - or even abandoning - a rushed deal may be more prudent than locking into obligations whose costs could far exceed any temporary tariff relief.” That’s the cleanest line in the whole file. The state can call it prudence. The market can call it leverage. Ordinary people will still be the ones living with the bill.