India-US Trade Deal Progress Stalled by Key Differences and Trust Deficit

India-US trade deal near, but key issues still unresolved: Asia Society Policy Institute experts

By Reena Bhardwaj, Washington DC, June 25

Wendy Cutler, Senior Vice President at the Asia Society Policy Institute (ASPI), said that "Despite substantial progress made in recent meetings, concluding a trade deal with India is proving illusive."

She added, "Each side has its own priorities and redlines which continue to prevent a successful conclusion. Moreover, developments over the last year have produced a serious trust deficit on the part of Delhi, which makes wrapping things up more complicated."

According to Cutler, India is seeking greater clarity on tariff arrangements before finalising any agreement. She said, "India very much wants a preferential tariff edge over its competitors, so it is in no hurry to conclude until there is further clarity on tariff rates and product exclusions. Moreover, it is seeking assurances from Washington on no further tariff hikes, which most likely is a bridge to far for the Trump team."

While welcoming reports of progress, she cautioned that the final stage of negotiations is often the most difficult. She said, "Being very close on concluding a trade deal is welcome news, but it is typically the final remaining matters that are the toughest to resolve, meaning expect further rounds between negotiators."

Farwa Aamer, Director of South Asia Initiatives at ASPI, said sustained engagement from both governments points to the possibility of an agreement, though challenges remain.

She said, "The sustained effort from both sides shows promise toward the deal, but not without a fair share of speed bumps and lingering uncertainty."

She noted that broader geopolitical factors have influenced the negotiations. She added, "The wider geopolitical divergences between New Delhi and Washington have also impacted the way at least India has been coming to the negotiating table, cooperative but more assertive. There is also a lot of domestic pressure on the Indian leadership to secure a balanced and fair deal so that tracks."

Aamer said an interim agreement could provide a boost to the broader bilateral relationship. She said, "If the talks do come to fruition and an interim deal is reached within the anticipated timeframe, it would certainly help the otherwise strained US-India ties and lend some momentum to other areas of cooperation. Both countries will benefit from a comprehensive deal."

She also highlighted India's efforts to diversify its trade partnerships. She added, "It is important to note how India is proactively engaging other trade partners in tandem. US trade policy has fast-tracked the hedging behaviour, and India recognises the need to expand the trade portfolio, aiming to reduce vulnerabilities where possible."

— ANI