After a period of strained relations marked by escalating tariffs, India and the United States are returning to the negotiating table to discuss a long-pending trade deal. Formal talks are scheduled to begin on Tuesday in New Delhi, with Brendan Lynch, the Assistant US Trade Representative for South and Central Asia, leading the U.S. delegation. This meeting signals a potential thaw in relations after Washington imposed higher tariffs on several Indian goods, including crude oil sourced from Russia.

The upcoming discussions follow a period of tension that saw the U.S. impose a 25% tariff on Indian exports, which was later doubled to 50% in response to India's continued imports of Russian oil. These tariffs, implemented in two tranches, significantly impacted Indian shipments. India viewed the move as a unilateral decision. The US measures were taken in response to India's continued purchase of Russian oil, which the U.S. sees as funding the Russia-Ukraine conflict.

Despite these tensions, recent signals from both sides suggest a willingness to reset the relationship. Prime Minister Narendra Modi and President Donald Trump have exchanged positive sentiments on social media, describing each other as "dear friends". This political backdrop sets the stage for potential progress in the trade negotiations.

The U.S. remains India's largest trading partner, with bilateral goods trade exceeding $120 billion last year. For India, finalizing a trade deal and removing punitive tariffs are crucial, considering the U.S. is its largest trade partner and biggest export destination.

The agenda for the meeting has not been revealed. However, the talks are expected to cover a broad range of issues, including U.S. access to India's agriculture and dairy markets, which has been a major sticking point in previous negotiations. In the past, India has been hesitant to open these sectors due to economic, cultural, and health concerns, particularly regarding genetically modified organisms (GMOs) and the use of animal-based feed in U.S. dairy production. The U.S. may now be focusing on premium cheese exports rather than seeking sweeping access to India's dairy sector. India, on the other hand, might consider allowing imports of GM corn for ethanol production.

The outcome of this round of negotiations is expected to shape the future of economic cooperation between the two countries. Progress in these talks could pave the way for high-level meetings later in the year. Both sides have expressed a desire to finalize the first phase of a Bilateral Trade Agreement (BTA) by the Fall of 2025. In February 2025, Modi and Trump announced the intention to finalize the first phase of a BTA by the Fall of 2025. The terms of reference were finalized in March, and both sides held five rounds of intense negotiations till July. Commerce Minister Piyush Goyal has indicated that the first set of deals should be finalized by November.

While challenges remain, the resumption of trade talks between India and the U.S. offers a glimmer of hope for a more balanced and mutually beneficial economic partnership. Whether both sides can navigate the complexities and find common ground remains to be seen.