Despite recent trade tensions and tariff hikes, India and the United States are continuing discussions to reach a bilateral trade agreement (BTA). Commerce Minister Piyush Goyal has expressed optimism about the strength of the India-US relationship and the potential for overcoming current hurdles. While a specific timeline remains uncertain, Goyal has suggested that the trade pact could be finalized by November.

Sticking Points and No-Go Zones

Several contentious issues have emerged as potential roadblocks in the negotiations. These include:

• Agriculture and Dairy: The United States is seeking greater access to India's agricultural market, particularly for dairy products, corn, soybeans, apples, almonds, and ethanol. However, India is hesitant to reduce tariffs on these items due to concerns about protecting its farmers and the potential impact on its large rural workforce. India's agriculture sector is largely unorganized, characterized by small landholdings, while the US sector is organized and export-oriented. Opening up the market could expose Indian farmers to import competition.
• Tariffs on Industrial Goods: Disagreements persist regarding tariffs on automobiles and auto components, steel, and aluminum. The US has already imposed tariffs on steel (25%) and aluminum (10%), which has created uncertainty. India is seeking a rollback of these tariffs.
• Digital Trade and Data Localization: The US is reportedly concerned about India's restrictive digital trade rules, weak intellectual property enforcement, e-commerce policies, data localization requirements, and opaque procurement practices. India needs to ensure that a trade deal with the United States does not undermine its policy sovereignty in the imposition of restrictions on cross-border data flows, server localization, customs duties on digital products, and open-source code.
• Intellectual Property Rights: India needs to be cautious about intellectual property rights, which could have far-reaching socioeconomic implications.
• Russian Crude Oil Imports: The United States has expressed concerns about India's continued imports of Russian oil. Washington has doubled tariffs on Indian goods in response to New Delhi's continued purchases of Russian oil.
• Geopolitical Alignment: Strategic autonomy against geopolitical alignment is another potential roadblock.

Goyal has emphasized that India will not compromise on issues that could hurt national interests, the interests of farmers, fishermen, and MSME (Micro, Small & Medium Enterprises) industries, or issues with religious sensitivities.

Recent Developments and Perspectives

Recently, the United States imposed an additional 25% tariff on key goods from India, bringing the total levy to 50%. India has called the tariffs "unjustified and unreasonable". Despite these tensions, both sides have expressed a commitment to continue negotiations.

Donald Trump has claimed that India has offered to cut its tariffs on US goods to zero, but it was "getting late" to conclude a deal. He has also characterized the India-US trade equation as a "one-sided disaster" due to India's high tariffs.

Potential for a Deal

Despite the challenges, there remains optimism that a trade deal can be reached. The BTA is meant to more than double bilateral trade to $500 billion by 2030 from the current $191 billion. India has already signed trade agreements with Australia, the UAE, Mauritius, the UK, and the EFTA (European Free Trade Association) countries. India is also engaging in trade negotiations with the European Union. These efforts indicate India's commitment to diversifying its trade relationships and promoting economic growth.

However, experts suggest that the most-awaited deal may face some major roadblocks, including mutual mistrust and an unpredictable negotiation environment. Future progress will likely depend on the outcome of upcoming leadership cycles, alignment on digital trade rules, and a reimagining of economic partnership beyond WTO-era thinking.