The story so far: Between statements by U.S. Trade Representative Jamieson Greer that the India-U.S. trade deal is not “imminent” and Finance Minister Nirmala Sitharaman’s recent remarks that the deal has reached a “plateau”, the commentary on both sides seems to suggest that deal negotiations have hit a roadblock. There are several reasons behind this, with both countries digging in their heels on various issues.
What are the most recent statements from both sides?
Last week, Commerce Minister Piyush Goyal held a bilateral meeting with Mr. Greer on the sidelines of the G20 Trade Ministerial in the U.S., following which he said that the discussions had been “productive” and had focused on the “early conclusion” of an interim agreement under the larger India-U.S. Bilateral Trade Agreement.
Within hours, however, Mr. Greer addressed the media and said that although negotiations had reached their final stages, he doesn’t think “there’s something imminent” regarding the deal.
Then, on Monday (October 5, 2026), Ms. Sitharaman made a telling statement, saying that “both sides have reached a plateau beyond which giving or taking might be very difficult”. This is of particular significance because one of the primary reasons for the deal being stuck now is the U.S.’ demands regarding issues that are India’s sovereign right and responsibility.
How delayed is the deal?
The original Bilateral Trade agreement, announced in February 2025 and to be completed by Fall of that year, is nowhere near completion. Discussions on a ‘mini deal’ on tariffs began in April 2025 but then were put on the backburner in August when the U.S. hiked tariffs on India to 50%.
Talks resumed in October, and by February both countries were in a position to announce that they had finalised a framework for an interim agreement on trade. This agreement was supposed to have been completed by March-April 2026.
However, it is yet to be finalised and, as Mr. Greer noted, doesn’t seem “imminent”.
What is holding it up?
Even though U.S. President Donald Trump in February 2026 removed the additional 25% tariffs he had imposed on India for its import of Russian oil, and the U.S. Supreme Court that same month struck down the system underpinning the remaining 25% tariffs, the issue of tariffs has remained the main sore point in the India-U.S. relationship.
In March, the office of the U.S. Trade Representative launched two separate investigations into America’s trade partners, including India. The first had to do with whether these partners had structural excess capacity in manufacturing and were using this capacity to export to the U.S. in a manner that was hurting the American economy.
The second investigation was into whether the U.S.’ trade partners were doing enough to prevent the import of goods made using forced labour. This investigation has been completed, and the U.S. has imposed a tariff of 10% on imports from India as a result. The ‘excess capacity’ investigation is ongoing and could result in further tariffs.
Speaking at the G20 Trade Ministerial in the U.S., Mr. Goyal last week defended India on both counts. Regarding forced labour, he said that India has ratified the relevant International Labour Organization (ILO) conventions and, in July 2026, also amended its Foreign Trade Policy to prohibit the import of goods produced using forced labour.
On excess capacity, the Commerce Minister was unequivocal: “India does not have structural excess capacity”.
Are those all the tariff issues?
Not even close. And this is where we come to Ms. Sitharaman’s “plateau” comment. Mr. Trump has been trying to get India to stop buying Russian oil for a while now. Hiking tariffs on India to 50% was one such attempt.
It seemed to have been working. An analysis by The Hindu showed that Russia’s share in India’s oil imports fell from nearly 37% in August 2025, when the tariffs were hiked, to less than 20% by February 2026 when they were removed.
However, the U.S. has now come up with an even more serious attempt. In September 2026, Mr. Trump signed the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 into law. Under this law, the U.S. can levy tariffs of up to 100% on countries that are the biggest importers of Russian oil and gas. These tariffs would be over and above any of the other tariffs the U.S. is already levying.
While historical data suggests that India has yielded to U.S. pressure on such matters, the situation now is very different. For one, the attacks by the U.S. and Israel on Iran that began at the end of February 2026, and the Iranian response to close the Strait of Hormuz, have placed immense pressure on India’s oil imports since that route was a vital source.
Secondly, India has responded to these constraints by once again turning to Russia for its oil imports. Russia’s share in India’s oil import bill rose to more than 51% in July 2026. Cutting out Russian oil, therefore, will be very difficult, if not impossible for India.
Yet, the Sanctioning Russia Act is a law passed by the U.S. Congress and signed into law by the President and, as such, carries much more legal heft than the reciprocal tariffs Mr. Trump had imposed last year through executive orders.
It is at this juncture that Ms. Sitharaman made her statement that things had reached a stage beyond which “giving or taking might be very difficult”.
Published – October 07, 2026 11:52 am IST
