India delays US trade deal amid new manufacturing probe
India is delaying a trade deal with the U.S. following new manufacturing probes. Officials are waiting for clarity on tariff policies before proceeding.
India will hold off on signing a trade agreement with the United States for several months, according to government sources. The delay follows new investigations by the administration of President Donald Trump into industrial capacity, which have introduced fresh complications into bilateral negotiations.
New Delhi had previously expected to finalize an interim deal in March. This followed an understanding reached in February where the U.S. proposed cutting tariffs on Indian imports in exchange for commitments including the reduction of Russian oil purchases and a pledge to buy $500 billion worth of American goods. However, that timeline is now expected to shift as both nations navigate new regulatory and geopolitical hurdles.
Negotiations reportedly lost momentum after the U.S. Supreme Court struck down several of Trump’s tariffs in late February. Since then, substantive discussions have stalled, with Washington largely preoccupied by the conflict in Iran. While the U.S. has urged India to increase oil purchases to stabilize global energy markets, the launch of a Section 301 investigation into structural excess capacity in 16 countries, including India, has created a significant obstacle for trade officials.
We are not in a hurry to sign any deal.
One source noted that the new investigation appears to be a pressure tactic designed to compel countries into agreements following the recent court rulings. Consequently, India is likely to adopt a wait and watch stance as U.S. trade policy continues to shift. While Trump previously removed a 25% punitive tariff on India, the country currently faces a 10% duty imposed on all imports through July.
U.S. Ambassador to New Delhi, Sergio Gor, expressed confidence that India would eventually honor its commitments, citing the potential for a mutually beneficial outcome.
So we fully expect the nations that weve made deals with to honour those deals.
Market analysts suggest that slowing down the negotiation process is a logical step for New Delhi. Priyanka Kishore, a consultant at Asia Decoded, noted that it is better for India to assess the results of the U.S. investigations rather than proactively signing an agreement under the current 10% tariff regime.
It makes sense for India to slow down on trade talks.
