{"id":127235,"date":"2026-10-03T11:42:35","date_gmt":"2026-10-03T06:12:35","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=127235"},"modified":"2026-10-03T11:42:35","modified_gmt":"2026-10-03T06:12:35","slug":"india-us-trade-deal-why-the-agreement-is-still-pending","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/india-us-trade-deal-why-the-agreement-is-still-pending\/","title":{"rendered":"India-US Trade Deal: Why the Agreement Is Still Pending"},"content":{"rendered":"<h2><b>India-US Trade Deal Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recently, US Trade Representative Jamieson Greer said that India-US trade talks are in their &#8220;final phase,&#8221; but signing is &#8220;not imminent&#8221; as both sides work to resolve &#8220;sticking points.&#8221;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This came as a surprise \u2014 India and the US had already agreed to a framework agreement in February 2026, and Commerce Ministry officials had maintained a deal was essentially reached, with India believed to be holding out for better tariff rates.<\/span><\/li>\n<\/ul>\n<h2><b>Mixed Signals: The Russia Sanctions Law<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In September 2026, President Donald Trump signed the <\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/us-russia-sanctions-bill-impact\/\" target=\"_blank\"><b>Lindsey O. Graham Sanctioning Russia and Iran Act of 2026<\/b><\/a><span style=\"font-weight: 400;\"> into law.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It allows for tariffs of up to 100% on major buyers of Russian energy \u2014 a category that includes India.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Unlike the earlier US tariff mechanism under the International Emergency Economic Powers Act (which was struck down by the US Supreme Court), these new tariffs cannot be legally challenged.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In February, the US had agreed to remove an additional 25% tariff on Indian imports, in recognition of India&#8217;s commitment to stop purchasing Russian oil.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In return, India committed to negotiate robust bilateral digital trade rules addressing discriminatory digital trade barriers.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The new Russia sanctions law now threatens to undo that earlier concession \u2014 sending conflicting signals to India.<\/span><\/li>\n<\/ul>\n<h2><b>The Section 301 Investigation<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Separately, India awaits a decision on a US investigation under <\/span><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/section-301-probe\/\" target=\"_blank\"><b>Section 301<\/b><span style=\"font-weight: 400;\"> of the Trade Act<\/span><\/a><span style=\"font-weight: 400;\"> of 1974.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">This probe is meant to determine whether India has &#8220;excess industrial capacity&#8221; that is harming American companies.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The first round of Section 301 action already resulted in 10% tariffs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">A second round is now expected.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Indian exporters report that this uncertainty is changing order patterns \u2014 US buyers are no longer placing bulk orders and are instead diversifying their import sources.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This could mean lower export orders for Indian businesses until a deal is finalised.<\/span><\/li>\n<\/ul>\n<h3><b>India&#8217;s Position<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Top US trade partners currently sit in a <\/span><b>10\u201315% tariff bracket<\/b><span style=\"font-weight: 400;\">, and India has sought better rates than ASEAN countries and China.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India countered the &#8220;excess capacity&#8221; claim, stating India&#8217;s manufacturing serves both domestic and global needs without structural overcapacity.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India shares G20 concerns about <\/span><b>trade-distorting support<\/b><span style=\"font-weight: 400;\"> leading to dumping, but addresses this through evidence-based WTO measures \u2014 anti-dumping and countervailing duties \u2014 rather than unilateral tariffs.<\/span><\/li>\n<\/ul>\n<h2><b>A Lopsided Framework?<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Under the February framework agreement, India committed to purchasing $500 billion worth of US products over five years \u2014 covering energy, aircraft and aircraft parts, precious metals, technology, and coking coal.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Experts point out there is <\/span><b>no reciprocal US commitment<\/b><span style=\"font-weight: 400;\"> to purchase Indian products, making the deal structurally one-sided.<\/span><\/li>\n<\/ul>\n<h3><b>The Sovereignty Concern\u00a0<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Beyond goods, the framework also includes a pledge to &#8220;strengthen economic security alignment&#8221;.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This covers supply chain resilience, addressing &#8220;non-market policies of third parties,&#8221; and cooperation on inbound\/outbound investment reviews and export controls.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Trade experts warned: If India is compelled to negotiate provisions on economic security alignment which are similar to those contained in the various Agreements for Reciprocal Trade between the US and some countries, then it would <\/span><b>substantially curtail India&#8217;s sovereignty<\/b><span style=\"font-weight: 400;\"> on foreign policy, trade and other economic matters.<\/span><\/li>\n<\/ul>\n<h2><b>A Pattern Beyond Trade: The Canada Precedent<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Analysts draw a parallel with the US-Canada trade war. Canadian PM Mark Carney has hinted that the US wanted Canada to refrain from signing a deal with China as part of their bilateral pact.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This suggests that American trade demands increasingly extend into foreign policy alignment, not just goods and tariffs.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The implication is that US demands from India may similarly extend beyond conventional trade issues.<\/span><\/li>\n<\/ul>\n<h2><b>US Criticism of India&#8217;s Domestic Investment Rules<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In an investment climate report released last month, the US State Department flagged specific Indian regulatory concerns:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">India&#8217;s <\/span><a href=\"https:\/\/vajiramandravi.com\/upsc-exam\/foreign-exchange-management-act-fema\/\" target=\"_blank\"><b>Foreign Exchange Management Act (FEMA)<\/b><\/a><b> restricts <\/b><span style=\"font-weight: 400;\">concurrent FDI and FPI.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"3\"><span style=\"font-weight: 400;\">This creates what the report calls a &#8220;redundant and uniquely burdensome restriction that blocks independent funds within the same investment group from participating in IPOs.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The effective tax rate paid by foreign banks is 4.63 percentage points higher than domestic banks, at 38.22%.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The State Department warned this higher effective tax burden may ultimately affect the relative attractiveness of India as a market for foreign lenders, potentially influencing their capital allocation, pricing, and scale of local operations.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The delay isn&#8217;t really about tariff percentages \u2014 it&#8217;s about how much economic sovereignty India is willing to trade for market access.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Between the Russia sanctions law, a pending Section 301 probe, a one-sided purchase commitment, and demands for &#8220;economic security alignment,&#8221; India faces leverage on multiple fronts simultaneously.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Until these threads are untangled, a signed deal will likely remain, as Greer put it, not imminent.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/us-leverage-india-trade-deal-prospects-10904194\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The India-US Trade Deal remains pending amid disputes over Russia sanctions, Section 301 tariffs, purchase commitments, economic security and investment rules.<\/p>\n","protected":false},"author":18,"featured_media":85645,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[2862,60,22,59],"class_list":["post-127235","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-india-us-trade-deal","tag-mains-articles","tag-upsc-current-affairs","tag-upsc-mains-current-affairs","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/127235","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=127235"}],"version-history":[{"count":3,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/127235\/revisions"}],"predecessor-version":[{"id":127265,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/127235\/revisions\/127265"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/85645"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=127235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=127235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=127235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}