The two sides have been locked in negotiations since early 2025, but the talks derailed after the US slapped tariffs as high as 50% on Indian imports in August. After a brief pause, the negotiations resumed in October, but the two countries could not reach the finish line.
Representatives of New Delhi and Washington are engaging in “robust negotiations”, and remain in regular touch as the discussions continue, the persons privy to the development added.
The development comes four days after US Treasury Secretary Scott Bessent signalled that half of the tariffs imposed on India—25% levies—could be waived as India has significantly trimmed its import of Russian crude oil.
“We put 25% tariffs on India for buying Russian oil, and the Indian purchases by their refineries… have collapsed,” Bessent told Politico on the sidelines of World Economic Forum in Davos. “I would imagine there is a path to take them off,” he added.
As per Sengupta, external headwinds may also alter India’s gross domestic product growth and current account deficit outlooks in FY27.
Sengupta claimed that if the US trade deal is delayed beyond the first quarter of FY27, it may result in some downside risk to the growth estimates. ”We are looking at 6.7% growth for 2026 and 6.8% YoY growth for FY27. There will be some downside to the numbers as sectors like textile, gems and jewellery will face trade losses,” Sengupta said.
”If the trade deal doesn’t come through and there are further headwinds to growth, then we think that the RBI can ease further and the fiscal space can also be used in terms of supporting sectors like textiles, gems and jewelry and and so on,” he added.
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Notably, US President Donald Trump had expressed enthusiasm about the trade deal with India in recent days, with him praising Indian Prime Minister Narendra Modi and stating that a “good” trade deal with India was on the cards.
“I have great respect for your Prime Minister. He’s a fantastic man and a friend of mine. We are going to have a good deal,” an Indian publication quoted Trump as saying at the sidelines of the World Economic Forum summit in Davos, Switzerland.
