The story so far: India and the U.S. in February 2025 announced that they would work towards a comprehensive Bilateral Trade Agreement (BTA) that was to be finalised by Fall 2025. Then, in February 2026, they signed a framework agreement for an interim trade deal that was to be implemented by April-May 2026. Neither deal has come to pass. The Hindu explains the latest issues that have led to delays.

Why was the BTA delayed?

Soon after Prime Minister Narendra Modi and U.S. President Donald Trump announced their intentions to complete a BTA in February 2025, it became clear that a comprehensive deal would be elusive. The talk among government officials was about finalising at least the first tranche of the deal by Fall 2025 (September-November 2025).

Talks intensified after April 2025 after Mr. Trump first announced his ‘Liberation Day’ reciprocal tariffs and then paused them for 90 days so he could negotiate deals with U.S. trade partners. However, despite several meetings, India and the U.S. could not finalise the first tranche, with key sticking points being India’s reluctance to open up its agricultural and dairy sectors, and its decision to buy oil from Russia.

In two successive announcements in late July and early August, Mr. Trump raised tariffs on imports from India to 25% and then to 50%, with the latter hike being a penalty for India’s Russian oil imports. This decision froze negotiations for a few months before matters thawed once again and talks resumed in October.

What is the interim deal?

Once talks resumed, Mr. Modi and Mr. Trump in February 2026 signed a framework for an interim agreement on trade. This was not a trade deal itself, but the framework along which one could be worked out. At the time, Commerce Minister Piyush Goyal expressed his confidence that the deal would be completed by April, or latest by early May 2026.

Under the framework, the U.S. was to reduce total tariffs on Indian imports to 18%, providing it a competitive advantage over its competitors. Both sides also committed to providing each other preferential market access in “sectors of respective interest”.

Why has this deal been delayed?

Soon after the framework was announced, the U.S. Supreme Court invalidated the reciprocal tariff system itself, saying the law it was based on — the International Emergency Economic Powers Act of the U.S. — did not allow for such tariffs. That removed a major foundation on which the deal negotiations had taken place.

Since then, the U.S. has taken several decisions that have further added to the tariff uncertainty.

Right after the Supreme Court’s decision, Mr. Trump announced that he would be imposing a flat 10% tariff on imports from all countries under the Trade Act of 1974, which he said authorised him to take action to address the U.S.’ ballooning trade deficit. This tariff was temporary, supposed to last 150 days up to July 24. Mr. Trump said he would raise it to 15%, but never did.

The U.S. Court of International Trade deemed these illegal as well, but an appeals court put a stay on that order.

What fresh investigations have added more uncertainty?

In March, the office of the U.S. Trade Representative (USTR) said it had initiated two investigations under Section 301 of the Trade Act into several of its trade partners that could potentially see further tariffs being imposed on them.

The first investigation against 16 economies, including India, was to see whether these economies were using excess manufacturing capacity to export to the U.S. in a manner that was hurting American businesses.

The second one, against 60 countries including India, was to look into whether these countries had taken “sufficient steps” to prohibit the import of goods produced with forced labour and how the “failure to eradicate” these practices impacts U.S. workers and businesses.

Under the forced labour investigation, the U.S. government in early June proposed to levy a tariff of 12.5% on imports from 54 countries, including India, as they have “failed to impose and effectively enforce” prohibitions on the import of goods produced using forced labour. To be sure, this does not mean India uses forced labour, but that it has not stopped the import of goods that have been manufactured using forced labour.

India has made its representations to the U.S. on this matter and the final hearing is on July 7. The findings of the excess capacity investigations are expected in mid-July.

What is India’s stance on the deal?

As repeatedly expressed by Mr. Goyal, India remains committed to finalising a trade deal with the U.S. but is firm about the fact that it should receive a comparative advantage over its competitors as was agreed in February. For this, the Section 301 investigations will have to be completed and the tariffs decided on various countries.

In the meantime, the two sides continue to negotiate on the other non-tariff aspects of the deal, such as enhanced market access, digital trade, supply chain resilience, reduction of non-tariff barriers, and expanded cooperation in strategic sectors. The latest visit by USTR Jamieson Greer to India on June 23-24 did not yield any deadlines.

Published – June 25, 2026 12:22 pm IST

U.S. Trade Representative Jamieson Greer will visit India on June 23-24, officials in the Ministry of Commerce said. File
| Photo Credit: Reuters

India and the U.S. are moving towards closing all the open ends of the interim trade agreement, and both sides are likely to execute the “very, very vibrant” first phase of the pact by the middle of next month, Commerce and Industry Minister Piyush Goyal said on Friday (June 5, 2026).

He said that the U.S. team was in New Delhi from June 2-4 for finalisation of the deal. They held discussions with the Indian team.

“I also met with them yesterday, and we are fast moving towards closing all the open ends, and I think sometime by the middle of next month or so, we should be in a position to execute a very, very vibrant first tranche…

“It is only the first tranche of our bilateral trade agreement, which will give preferential access to India over our competitors,” he told reporters here.

He added that a high-level team is expected to visit India towards the end of this month.

The team is likely to be led by U.S. Trade Representative (USTR) Jamieson Greer.

During this week’s talks in the national capital, the two teams held constructive and positive discussions across a wide range of issues, covering trade in goods, non-tariff measures, customs and trade facilitation, economic security alignment and other areas of mutual interest, the Commerce Ministry said.

The U.S. team was led by its chief negotiator Brendan Lynch. India’s chief negotiator is Darpan Jain, who is an additional secretary in the Department of Commerce.

After finalising the framework for the first phase of the bilateral trade agreement (BTA), the two countries are looking to finalise the details of the interim trade pact and take forward the negotiations for the broader BTA.

On February 7, India and the U.S. issued a joint statement finalising the contours or framework of the first phase of the BTA or an interim trade deal.

According to that framework, the U.S. had agreed to reduce tariffs on India to 18% from 50%. It had removed the 25% tariffs on Indian goods for buying Russian oil and was to cut the remaining 25% to 18% under the pact.

But, on February 20, the U.S. Supreme Court ruled against President Donald Trump’s sweeping reciprocal tariffs, which were imposed under the 1977 International Emergency Economic Powers Act (IEEPA).

After that, the U.S. President announced the imposition of 10% tariffs on all countries for 150 days, starting February 24. It will end on July 24.

In light of these changes, the two sides met in Washington in April, when the Indian team, headed by Mr. Jain, visited America from April 20-23, 2026.

To carry forward those discussions, the U.S. team was here for the talks.

As the tariff landscape has changed in the U.S., both sides may wish to revisit the agreement’s framework.

The February joint statement on the framework has a clause that in the event of any changes to the agreed upon tariffs of either country, the US and India agree that the other country may modify its commitments.

Under the agreed framework, India proposed to eliminate or reduce tariffs on all U.S. industrial goods and a wide range of food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.

New Delhi has also expressed its intentions to purchase $500 billion of U.S. energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years.

When the framework was agreed, India had a comparative advantage over its competitor countries, such as Sri Lanka, Pakistan and Bangladesh.

Now, with all U.S. trading partners facing a uniform 10% tariff, the pact requires recalibration.

It is important that India gets an advantage over its competitor nations on the tariff front in the trade pact.

As the U.S. Supreme Court has ruled against Mr. Trump’s sweeping tariffs, the U.S. administration now has the option of using the Section 301 investigation mechanism to impose new tariffs.

According to sources, the U.S. could use this mechanism as a pressure tactic to bring its trading partners on the table to negotiate trade deals.

In March, the U.S. Trade Representative (USTR) launched two unilateral Section 301 investigations against a number of countries, including India, over excess capacity and failures to eradicate forced labour in global supply chains.

On June 2, the USTR proposed imposing 12.5% tariffs on 54 countries, including India, for allegedly failing to prohibit the import of goods produced with forced labour.

The proposed duty follows investigations launched in March against 60 countries under Section 301 of the Trade Act of 1974 over concerns related to forced labour.

The measure remains a proposal and has not yet been finalised, the USTR said, adding that interested parties can submit requests to appear at hearings and summaries of testimony by June 22. The USTR is scheduled to hold hearings on July 7.

The U.S. was the second-largest trading partner of India in 2025-26.

India’s outbound shipments to the U.S. grew marginally by 0.92% to $87.3 billion during the last fiscal year, while imports increased 15.95% to $52.9 billion. The trade surplus declined to $34.4 billion in 2025-26 from $40.89 billion in 2024-25.

Published – June 05, 2026 07:27 pm IST

U.S. President Donald Trump and Prime Minister Narendra Modi. File
| Photo Credit: AP

 U.S. Envoy to ‌India Sergio Gor with U.S. ⁠Trade Representative Jamieson ‌Greer. Credit: X/@USAmbIndia

The U.S. views the Quad (Quadrilateral Strategic Dialogue comprising India, the U.S., Japan, and Australia) as a “very important platform,” according to S. Paul Kapur, the top Trump administration diplomat for the South and Central Asian region.

“… The Quad is a very important platform. It has done well,” Assistant Secretary Kapur told the U.S. House Foreign Affairs Subcommittee on South & Central Asia on Wednesday (February 11, 2026), characterising India as an “active” and “important” participant.

The U.S. and India were looking to expand defence exercises and interoperability following the signing of their latest ten-year defence cooperation framework (October 2025), according to Mr. Kapur.

“We also have some potential purchases of weapon systems in the pipeline that will help India to protect itself better and ensure its sovereignty. Also (this) will create American jobs (and) be good for both sides,” he said.

In addition to trade, the Trump administration was deploying targeted investment, diplomacy and defence cooperation to build strategic capacity in the region, as per Mr. Kapur, who drew a causal link between the recent completion of a U.S.-India trade deal and fresh momentum in the relationship.

“Following the trade framework President Trump reached last week with Prime Minister Modi, we can now focus on other shared priorities, lowering barriers to trade with one of the largest economies in the world, and opening the way to even more fulsome cooperation,” he told the handful of lawmakers at the hearing in Washington D.C.

Despite the uncertainties around trade, India and the U.S. were moving forward on “most axes” of the relationship, according to Mr. Kapur.

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On energy, Mr. Kapur said that India had been reducing its purchases of Russian oil and “diversifying away” from it. ”…Which is what we wanted them to do,” he added.

“And they’ve (India) actually been buying more U.S. energy. And that’s, I think, a promising possibility… to substitute some U.S. energy for the Russian energy…and buying from other places around the world too, of course,” he added.

Pakistan-U.S. working on critical mineral resources together: Kapur

The Trump administration official characterised Pakistan as “another important partner” in the region.

“We are working together with Pakistan to realise the potential of its critical-mineral resources,” he said, adding that energy and agricultural trade was expanding and counter-terrorism cooperation was ongoing.

On the February 12 elections in Bangladesh, Mr. Kapur said it was a “great thing” and that the U.S. was “very optimistic” about it, as it was about Nepal, which is expected to hold general elections in early March.

He characterised the change in Nepal and Bangladesh as “youth movements overthrowing older governments and now creating the opportunity for democratic participation”.

“So with Nepal, we also trust that we’ll have a secure and peaceful … electoral process, and we’re prepared to work with whoever wins,” he said.

At one point in the hearing, Mr. Kapur said that a dominant and hostile power in South Asia was not desirable for America.

“A hostile power dominating South Asia could exert coercive leverage over the world economy. The United States must prevent this from happening and keep the region free and open,” he said, adding that the U.S. needed to cooperate with partners. There were multiple references to China during the approximately one-hour-long hearing, which also exposed the different attitudes across Members of Congress towards the Trump administration’s handling of the India-U.S. relationship.

During the hearing, Representative Ami Bera, an Indian American Democrat from California, stated that he had been in India at the end of September 2025, just after Mr. Trump had imposed a 50% tariff and a $100,000 fee on some H-1B visas. He explained that from the perspective of the U.S. Congress, “nothing had changed” regarding a “three-decade strategy” that dates back to President Bill Clinton.

India strategic piece of puzzle in stabilizing the Indo-Pacific: Ami Bera

“We see India as a strategic piece of the puzzle in stabilising the Indo-Pacific. They (Indians) still see that. We see the economic relationship,” Mr. Bera said, adding that he was “cautiously optimistic” about the trade deal.

 Mr. Kapur agreed that the strategy with regard to India had transcended Republican and Democrat administrations.

Mr. Bera asked Mr. Kapur to “push” India to use its diplomatic lines of communication with Moscow to assist the Trump administration in bringing peace to Ukraine.

India did not have to “go far afield to support our (U.S.) strategic interests”, according to Mr. Kapur.

“An independent, strong, prosperous India takes a big swath (swathe) of the Indo-Pacific away from China and that is actually a strategic win for us,” he added. Mr. Kapur was responding to Keith Self, a Texas Republican, who had asked what India was doing to counter China’s Belt and Road Initiative.

During the hearing, Mr. Kapur had said the U.S. goal was not to keep China out of the region but to prevent China or any hegemon from taking over the region or using its coercive leverage over the region.

Ranking Member of the committee, Sydney Kamlager-Dove, a Democrat, asked Mr. Kapur if he thought there were any preconditions that had to be addressed before the U.S. agreed to participate in the Quad Leaders Summit. Mr. Kapur did not address this part of her question.

Ms. Kamlager-Dove also said she was concerned that the Quad was mentioned just twice in the 2025 National Security Strategy of the Trump Administration. (It is, in effect, mentioned only once in the Strategy, in its full form  and in the abbreviated form).

India is supposed to host the Quad Summit this year.

The Democrat described the 50% tariff on India as causing a “needless rupture” in ties that delayed the Quad Summit and “sacrificed decades of painstaking trust-building” between India and the U.S.

She said Mr. Trump insisting he was responsible for a ceasefire in the four-day war between India and Pakistan in May 2025 and offering to mediate on Kashmir, overshadowed the role of U.S. diplomacy.

Ms. Dove pushed Mr. Kapur on protections for Afghans resettled in the United States and criticised the Trump administration’s policies on Afghanistan and Afghans, focusing on the status of women and girls. Chair of the Committee Bill Huizenga (Republican) criticised the Biden administration’s chaotic withdrawal from Afghanistan in 2021, calling that a “true betrayal” of America’s Afghan allies.

Russian Foreign Minister Sergei Lavrov. fILE
| Photo Credit: Reuters

File picture of U.S. President Donald Trump and Prime Minister Narendra Modi.
| Photo Credit: AP

The joint statement on a US-India framework trade agreement will likely be published in the next 2-3 days, fleshing out more details of the deal announced by US President Donald Trump on Monday. In several cases, India also get the zero tariffs, according to government sources. The data centre itself will fetch $20 billion.

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On plans to halt Russian oil purchases, government official said India’s government believes in diversifying its sources of energy. The government doesn’t dictate to companies where to buy oil, and if they wanted to purchase sanctioned Russian oil, it’s their decision to do so, the official said.

Goyal on Tuesday said India has got a very good trade deal with the US, better than competitors, without compromising interest of the agriculture and dairy sectors.Without giving details of what has been agreed with Washington, Goyal said the trade deal is in the final stages, and an Indo-US joint statement will be issued shortly detailing the contours of the agreement.

India-US trade deal will open huge opportunities for the poor, fishermen, farmers and youth of the country, Goyal said. This trade deal with the US is a good omen for India’s bright future, the commerce minister added. Goyal said that as part of the deal, the reciprocal tariff on Indian goods will come down to 18 per cent from 50 per cent.