India-US trade talks deadlocked as Indian delegation extends stay in Washington

With just over a week left until the 9 July deadline, trade negotiations between India and the United States remain locked in a stalemate, prompting Indian negotiators to prolong their stay in Washington in a final push to break the impasse.

The extended discussions underscore the seriousness of the unresolved differences, particularly in contentious sectors such as agriculture, dairy, textiles, and steel. Despite months of dialogue, both sides remain at odds, casting doubt over the likelihood of securing even a limited trade agreement in time.

India has consistently called for the rollback of reciprocal tariffs and additional duties on its exports, including steel, aluminium, and auto components. It has also sought assurances against future tariff impositions, which have caused uncertainty for Indian exporters. The United States, on the other hand, is demanding greater access to Indian markets for a range of goods—particularly agricultural produce, automobiles, and spirits such as whisky.

A major flashpoint in the negotiations is agricultural trade, with the US pressing India to allow genetically modified (GM) products and relax norms governing dairy imports, including those tied to animal feed. India has so far resisted these demands, calling them “non-negotiable red lines”.

Finance minister Nirmala Sitharaman has reiterated the government’s commitment to safeguarding India’s farm and dairy sectors, a position echoed by domestic industry representatives concerned about the long-term implications of such concessions.

India-US trade deal hits a rough patch

"some American farm products, like nuts & cranberries, that India does not mind...But if the US stands firm on mentioning more sensitive goods, such as foodgrain & milk products, the Indian govt will have a problem." https://t.co/Eba7NB7cCe

— Rishap Vats (@VatsRishap) June 28, 2025

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Labour-intensive sectors such as textiles and footwear have also emerged as key issues. India is lobbying for equal tariff treatment in the US market, especially when compared with other countries that already benefit from free trade agreements with Washington. A more equitable framework around rules of origin and tariff barriers could significantly boost Indian exports in these sectors.

Adding urgency to the talks is the recent thaw in US-China trade relations. Although Beijing initiated talks much later, it has already concluded a trade agreement with Washington. Indian exporters, who had benefitted from US tariffs on Chinese goods, now face renewed competition if India fails to reach a deal.

Despite the hurdles, Indian officials are keen to strengthen strategic trade ties, particularly in sectors such as energy and defence. Oil imports from the United States, for instance, rose by more than 270 per cent year-on-year in the first four months of 2025, reflecting New Delhi’s broader effort to diversify supply sources and reduce geopolitical vulnerabilities.

With the temporary pause on reciprocal tariffs nearing expiration, both sides appear eager to avoid a breakdown in talks. However, the extension of the Indian delegation’s visit signals how far apart the two countries still stand on core issues. As the clock winds down, the path to a meaningful trade breakthrough remains far from certain.