India-US trade deal still pending: Is Trump asking for too much?
One of the biggest roadblocks in the negotiations is India's protection of its agricultural and dairy sectors.'Agricultural and dairy product protections remain primary concerns, as these sectors are politically and economically sensitive for India. Hence, India is negotiating with the US against any tariff reductions on dairy, rice, wheat, and genetically modified (GM) crops like corn and soybeans citing the livelihoods of over 700 million rural citizens, including 80 million smallholder dairy farmers,' said Sankhanath Bandyopadhyay, economist at Infomerics Valuation and Ratings.The US, on the other hand, is pushing for more access to India's agricultural market, especially for GM crops, dairy, corn, soybeans, apples, almonds and ethanol. Washington is also seeking cuts in tariffs on these products, something India is not willing to allow.At the same time, India wants lower duties on its exports to the US, especially on steel, aluminium and auto parts.'India is seeking full exemption from the US's 26% reciprocal tariff and reductions in US duties on Indian steel, aluminium, and automotive products. For instance, the US increased tariffs on imported steel from India doubling the rate from 25% to 50% on June 4, 2025,' said Bandyopadhyay.There are also non-tariff issues causing a delay. The US is pushing for greater digital market access for American tech firms, while India has concerns over intellectual property and data protection. The US also considers India's data localisation rules and strict quality control measures as protectionist in nature.India's membership in the BRICS group and its role in exploring alternatives to the US dollar is also a concern for Washington.IS US ASKING FOR TOO MUCH?Experts believe that the US is applying more pressure on India than it did on countries like Japan.'The US approach to trade negotiations with India and Japan reflects a broader strategy of gaining sector-specific advantages while protecting its own domestic markets. In India's case, agriculture and dairy are highly sensitive sectors with deep political implications, unlike Japan's auto sector, which has more flexibility for negotiation,' said Bandyopadhyay.advertisementIndia also faces a bigger challenge because of its high trade deficit with the US and higher average tariffs. While countries like the UK or Vietnam could accept basic tariffs to reach a deal, India is asking for full exemptions and is not willing to give up on key sectors.WHAT MAKES INDIA'S CASE DIFFERENTBandyopadhyay explained that India's approach to the US is more strategic and cautious than other countries.'India is in a more vulnerable position due to the critical economic and social importance of the sectors targeted by US tariffs India has a significant trade deficit with the US (USD 45.7 billion in 2024) and maintains higher average tariffs (17% compared to the US's 3.3%)," he said. Unlike Vietnam or Indonesia, which agreed to make concessions to avoid higher tariffs, India is negotiating harder. India is also focusing on protecting labour-intensive sectors like textiles and gems that employ large numbers of workers.ECONOMIC AND STRATEGIC RISKS OF DELAYIf the talks continue to stall, it may have broader consequences for both countries.Bandyopadhyay warned, 'Continued delays in finalising the deal could strain the broader US–India strategic partnership, including cooperation in defence, technology, and innovation under the US–India COMPACT framework.'advertisementIndia could also face higher tariffs on key exports if the talks break down. It may miss out on better access to the American market for its textile, jewellery and other export sectors. With global trade relations shifting fast, a deal could help strengthen India's position.GEOPOLITICAL ANGLEThere is also a strategic layer to the deadlock. Harshal Dasani, Business Head at INVasset, said, 'While the US recently signed a trade deal with the Philippines, talks with India remain stuck. Complicating matters further is Washington's dual stance: on one hand, it's pursuing selective trade alignments; on the other, it's threatening up to 500% tariffs on countries trading with Russia.'He added that India's oil imports from Russia and its growing ties with BRICS make the US uneasy.'But Washington cannot afford to alienate both India and China. The longer it delays a decisive stance, the closer India, China, and Russia move, which could be a geopolitical nightmare for the US,' Dasani said.Negotiations between India and the US on a crucial trade pact remain at an impasse, with talks now expected to resume when a delegation from Washington visits Delhi in the second week of August, sources said.While at least 14 countries have received formal notices from Washington about impending tariffs ranging from 25 per cent to 40 per cent, India has not received such a letter. This has given hope that negotiations are still alive, albeit under growing pressure.- EndsTune InMust Watch
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