NEW DELHI: US and Indian trade negotiators have kicked off two days of talks in an effort to secure a trade deal, following Washington’s imposition of 50 percent tariffs on most Indian goods over its purchases of discounted Russian crude. The tariffs, imposed in August, were aimed at discouraging India from financially supporting Moscow’s war in Ukraine.
Deputy US Trade Representative Rick Switzer arrived in New Delhi for the discussions, described by India’s foreign ministry as a “familiarisation” trip. The visit comes a week after Prime Minister Narendra Modi hosted Russian President Vladimir Putin, highlighting the delicate geopolitical backdrop of the negotiations.
India is among the few major economies yet to finalize a trade agreement with the US since President Donald Trump’s sweeping tariffs on most US trade partners in April. The lack of an agreement has raised concerns over jobs, economic growth, and investor confidence.
India’s trade deficit with the US reached $45.8 billion in 2024. While key exports such as smartphones and generic drugs are exempt from the tariffs, labour-intensive sectors like gems and jewellery, textiles, and seafood have been hit hard, with exports in these sectors dropping between 37-60 percent between May and September.
Overall exports to the US fell nearly 12 percent year-on-year in October. The turbulence has also contributed to foreign investors offloading over $16 billion from Indian equities this year, pushing the rupee to a record low past 90 per dollar. The International Monetary Fund has reduced India’s 2026-27 growth forecast from 6.4 percent to 6.2 percent, citing prolonged US tariffs.
The import of discounted Russian oil remains a central issue. India’s purchases surged after Russia’s invasion of Ukraine in 2022, but Washington linked trade policy to geopolitics in August, penalizing India for continuing imports.
Modi did not comment directly on oil flows during Putin’s visit, but major buyers like Reliance Industries and HPCL-Mittal Energy have reported stopping imports, particularly for export-focused operations. Analysts expect a notable drop in India’s December-January imports, though whether this will satisfy US demands remains uncertain.
Agriculture tariffs have also been a sticking point, with India reluctant to lower tariffs on staples like rice and wheat to avoid angering its influential farming constituency. Officials say most issues have been largely resolved, though disputes persist over “reciprocal” tariffs imposed by the US. Commerce Secretary Rajesh Agrawal noted that two parallel negotiations are ongoing, with progress in one feeding into the other.
Some progress in bilateral relations has been reported since August, including US approval of two arms sales worth nearly $93 million and India securing a significant deal for nearly 10 percent of its liquefied petroleum gas imports from the US. Energy commitments like these could help reassure Washington of India’s reduced dependence on Russian oil and pave the way for broader trade cooperation.
The outcome of these talks will be closely watched, as both nations seek to balance economic interests with geopolitical concerns.
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