Washington DC

The U.S. and India are not “far off” from finalizing an interim trade deal, but need to bridge some negotiating gaps, such as over discussions on pulses and the staging of tariff reductions, according to a U.S. official.

“We’re not that far off from finalizing the interim trade deal, but some gaps remain,” the official told The Hindu in recent days.

Officials in Washington are working out the nitty-gritty of trade agreements following the U..S Supreme Court’s February 20 ruling that the International Emergency Economic Powers Act (IEEPA), which was the basis for President Donald Trump’s ‘reciprocal tariffs’, was unlawfully applied. The administration is now working towards re-establishing the reciprocal tariffs using other legislative tools, including ‘Special’ 301 trade investigations conducted by the Office of the U.S. Trade Representative’s (USTR).

One of the gaps in India-U.S. discussions, as per the U.S. official, is around pulses, with India seeking to safeguard the market for this agricultural commodity and the U.S. wanting greater access to it. Politically, agriculture is a deeply sensitive issue for both countries, with the administration in DC and government in New Delhi not singing from the same song sheet— or, more literally, ‘fact sheet’.

Last month, the White House put out a ‘fact sheet’– including the term “certain pulses” on a list of items that, it claimed, India would cut tariffs on. This and other discrepancies with the joint statement issued by Washington and New Delhi had created a political furore in India. The White House quietly reissued the ‘fact sheet’ – a political statement, rather than a statement of fact– this time omitting the reference to pulses and correcting certain other discrepancies.

However, the U.S. side still appears to be pushing for market access on pulses. Additionally, The Hindu has learned that Washington is seeking reduced staging (i.e., the speeding up of a phased reduction in tariffs) and this is currently one of the gaps in negotiating positions and is under discussion.

Conversations The Hindu has had in recent days suggest that right now, however, trade officials in Washington are not focused on closing the gaps in trade deals but are busy conducting Special 301 investigations launched in March against tens of countries, including India, ostensibly for excess capacity in manufacturing and forced labour.  

​Farmers’ pulse: On India and its demand for pulses

While the U.S. did sign a trade deal since the latest set of 301s was launched, this was with Ecuador, (on March 13), a country with an economy at least 30 times smaller than India and whose bilateral trade with the U.S. is a fraction of U..S-India bilateral trade.

These probes— which are conducted annually on different countries— will enable the imposition of tariffs on top of the universal tariff rate of 10% , imposed on February 24 using Section 122 of the U.S.’s Trade Act, following the Supreme Court ruling. Section 122 tariffs, applied temporarily when there is a balance of payments issue, can be applied for no more than 150 days and cannot exceed 15% as per law.

Mr. Trump had said in February that he would increase the universal 10% rate to 15%. However, this has not happened and officials in DC appeared unsure whether it would happen at all. A question to the White House on the timing of any such hike went unanswered. The USTR also did not provide information on possible rate hike, when approached by The Hindu.

Hiking this universal tariff to 15% would also complicate Washington’s agreements with countries that had reciprocal tariffs of less than 15%. Additionally, the White House has been focused on Iran in terms of foreign policy and the Department of Homeland Security shutdown, domestically.

Meanwhile, countries are busy with another part of the trade agenda: the World Trade Organization’s 14^th ministerial conference in Cameroon March 26-29. Among the contentious topics is trade in e-commerce, where Indian and American positions are not aligned. India has for long wanted an end to the moratorium on tariffs on various forms of e-commerce (software downloads, digital music, etc.) while the U.S. would like to make this permanent.

The Ministry of New and Renewable Energy on Sunday (December 7, 2025) said it had not issued any advisory to pause or halt new financing for the sector.

The clarification came after Reuters reported on Friday (December 5) that the Ministry had urged lenders to proceed slowly in financing new solar module plants because supply had exceeded demand.

Also Read | India’s clean energy rise needs climate finance expansion

The New And Renewable Energy Ministry’s letter rattled solar manufacturers in the country, with many raising concerns that the move could choke financing for the entire sector.

On Sunday (December 7), the Ministry said that it had asked the Finance Ministry to advise lenders to adopt a “calibrated and well-informed approach” when evaluating proposals for additional standalone solar photovoltaic module capacity, citing oversupply risks. It added that the advisory was not intended to stop funding for the entire clean energy sector.

“This broad-based caution, if applied without distinction, could hurt solar cell manufacturing,” said Chetan Shah, the chairman and managing director of Solex Energy.

“Restricting financing now will disrupt under-construction projects and deepen reliance on imported cells,” he said.

Several firms ramped up module production in recent years, betting on exports to the U.S. But higher American tariffs and tighter scrutiny of Indian shipments for Chinese-origin components have hit exports, raising fears of a glut at home.

India’s module capacity is projected to surge by a third to 200 gigawatts (GW) in the next few years, while cell output could quadruple to 100 GW, according to the Ministry.

The Ministry remained committed to strengthening solar manufacturing through policy support and infrastructure development, it said on Sunday (December 7).

U.S. President Donald Trump said he spoke with Prime Minister Narendra Modi on Tuesday (October 21, 2025), with their conversation focused largely on trade.

“We talked about a lot of things, but mostly the world of trade,” Mr. Trump told reporters in the Oval Office.

Mr. Trump added that energy was also part of the discussion, saying Mr. Modi assured him that India would be limiting its oil purchases from Russia.

“He’s not going to buy much oil from Russia. He wants to see that war end as much as I do,” Mr. Trump said.

India and China are the two top buyers of Russian seaborne crude exports.

Mr. Trump has recently targeted India for its Russian oil purchases, imposing tariffs on Indian exports to the U.S. to discourage the country’s crude buying as he seeks to pressure Moscow to negotiate a peace deal in Ukraine. 

India expects to increase its energy trade with the U.S. in the coming years, Commerce and Industry Minister Piyush Goyal said on Tuesday (September 23, 2025), adding that India’s energy security would have a “high element” of U.S. involvement going ahead. 

Speaking at an event organised by the U.S.-India Strategic Partnership Forum (USISPF) in New York, Mr. Goyal also said that the two countries would be working closely on nuclear power. The Commerce Minister is in the U.S. to take forward talks on a Bilateral Trade Agreement between India and the U.S.

“India is a big player in the energy trade,” Mr. Goyal said. “We are big importers of energy from across the world, including from the U.S. We expect to increase our trade with the U.S. on energy products in the years to come.” 

Also read | India, U.S. to intensify efforts for a trade deal, says MEA

“And, being close friends and natural partners, our energy security goals will have a very high element of U.S. involvement, which will ensure price stability, diversified sources of energy for India, and help us unlock limitless possibilities with the U.S. on various fronts — energy and beyond,” he added.

This comes at a time when the U.S. has imposed a 25% additional tariff on Indian imports as a “penalty” for importing Russian oil. U.S. President Donald Trump has previously talked about how he wants India to instead buy American oil.

Mr. Goyal said that another area where India and the U.S. plan to work together is nuclear power. 

“It is an area we have been talking about for a long time,” he remarked. “There were certain elements that needed to be set right, and I believe we are working in India to support the private efforts in nuclear power.” 

Mr. Goyal also had strong words for the European Union regarding its plans to impose a Carbon Border Adjustment Mechanism (CBAM) tax on imports. The mechanism, set to come into force in 2026, will see a substantial increase in tariffs on European imports from India, among other countries. 

“There is a lot of effort to address the impact of climate change through trade measures and we have to be cautious that we don’t allow trade and the fight against climate change to get conflated,” he said. “That has serious risks of actually dissuading countries rather than encouraging countries in joining the movement in addressing climate change.”

He further said that CBAM could isolate the EU and hurt their economy as it would render them uncompetitive in global trade.

“They would actually cause inflation in their own economy, they would land up causing their infrastructure and cost of living to become unviable,” Mr. Goyal added. “Their products will lose market share in exports. And at the same time, this green protectionism is like a trap in which if somebody buries his head, he may find it very difficult to come out of the sand.” 

The Commerce Minister has been vocal about his resistance to CBAM for a while now, even threatening retaliatory action by India if Europe goes ahead with its plans. 

Mr. Goyal also spoke about the issue of critical minerals, saying that the best way forward for all is to ensure resilient critical mineral supplies and diversify sources to ensure that “trade is not weaponised”.

The removal of the additional 25% tariff on India is not a prerequisite for trade negotiations to resume between India and the U.S., but a trade deal would not “be practical” if these tariffs were to remain, according to government sources.

They added that while negotiators from both sides are in contact, formal negotiations have not yet resumed and the date for the next formal round has not been decided. The government is also working on addressing the liquidity-related short-term issues that exporters have voiced concerns about.

“The formal round that was scheduled for the end of August has been postponed,” a source said. “We have not finalised the date yet because with the overhang of the additional tariff, it was not practical to have official level discussions on the entire BTA package.”

“Everything is on the table, but we understand that both (the 25% reciprocal tariff and the 25% penalty tariff) will have to be resolved together,” the official added. “We hope to get back to the table soon.”

However, he stressed that the Indian government did not see the removal of the 25% penalty tariffs as a “precondition” to resume the BTA talks.

Support for exporters

“The export bodies have asked for various types of support such as interest subvention, moratorium, and credit support, which we are considering,” the source said. “One main issue they raised was on liquidity, and the government is working on ways to address this.”

Notably, the government is also aware of the limitations of its support measures.

“Export promotion incentives cannot be very high, they can only be a few percentage points,” the official explained. “But right now, for the sectors getting hit, there’s virtually a trade embargo in place. You can’t export with 50% tariffs. The incentives cannot fix that.”

However, the government also believes that the medium-term impact of these tariffs would be mitigated through the liquidity measures it takes, the ongoing efforts to diversify India’s exports, the other Free Trade Agreements (FTAs) India has signed, the strength of domestic demand, and the Export Promotion Mission the government will launch soon, the official said.