India-US Trade Talks Hit a Wall

Nirmala Sitharaman said India-US trade negotiations have plateaued, with Russian oil tariffs complicating the talks.

India and the United States have acknowledged that their long-running trade negotiations have reached a difficult stage, with Finance Minister Nirmala Sitharaman describing the talks as having reached a “plateau”. Negotiations have been continuing since February 2025, with both countries seeking a broader economic agreement covering tariffs, market access and trade imbalances. Sitharaman said further concessions could be extremely difficult for both sides, signalling that the remaining disagreements are no longer minor technical issues but involve politically sensitive economic interests.

The negotiations have become more complicated because of the Trump administration’s increasingly aggressive use of tariffs. A US law signed recently gives President Donald Trump authority to impose tariffs of up to 100% on countries purchasing significant quantities of Russian oil, including India and China. India remains one of the world's major buyers of Russian crude, and New Delhi has defended its energy purchases as necessary for economic stability. Washington, meanwhile, wants to reduce its trade deficit with India and has pressed New Delhi for greater market access.

The impasse matters because the United States is India’s most important export destination, while India sees stronger access to the American market as a major opportunity for manufacturing, services and investment. A trade agreement could have helped Indian exporters manage tariff uncertainty while giving American businesses greater access to India’s rapidly expanding consumer market. Instead, the negotiations are now caught between trade policy and geopolitics. India does not want to compromise its energy relationship with Russia merely to secure a commercial agreement with Washington, while the United States increasingly views economic relations through the lens of strategic competition. The next stage of negotiations will therefore test whether both sides can separate commercial disagreements from their wider geopolitical differences.