India is expected to hold off on signing a trade deal with the United States for several months, according to multiple government sources cited by Reuters as new investigations launched by President Donald Trump’s administration add fresh uncertainty to negotiations.
New Delhi had earlier hoped to finalise an interim agreement in March, followed by a broader trade deal later in the year. The preliminary understanding came after Washington agreed to reduce punitive tariffs on Indian imports, while India was expected to consider measures such as reducing Russian oil purchases, lowering duties on US goods, and expanding purchases of American products.
However, the timeline has now slowed after the United States initiated a new probe into “structural excess capacity and production” in manufacturing sectors among 16 trading partners, including India, under Section 301 of the US Trade Act of 1974, according to sources familiar with the discussions.
Talks lose momentum after US tariff ruling
Negotiations also lost pace after the US Supreme Court struck down Trump-era tariffs in late February, the sources said. Since then, there have been no substantial talks, partly due to Washington’s focus on the ongoing conflict involving Iran.
India has not halted purchases of Russian crude oil, but only slowed them, sources added. US officials have reportedly urged New Delhi to increase energy purchases from the United States to help ease global supply pressures triggered by the conflict in the Middle East.
“Wait and watch” approach from India
Officials said India may adopt a “wait and watch” strategy until US tariff policies become clearer.
Earlier, Washington had imposed punitive tariffs of up to 50% on Indian exports, among the highest globally. That rate was later reduced to 25% after discussions with India, and following the Supreme Court ruling, the US imposed a temporary 10% tariff on imports from all countries until July 24.
India is now seeking clarity on whether the proposed tariff rate of around 18% for Indian exports under the interim framework would still apply or if new tariff levels will be introduced.
US expects India to honour commitments
US Ambassador to India Sergio Gor said Washington expects countries that have reached agreements with the United States to honour their commitments.
Meanwhile, India may present its position to the Office of the United States Trade Representative, and could also consider approaching the World Trade Organization depending on the outcome of the US investigation.
Analysts say delaying the agreement could allow India to better understand evolving US trade policies before finalising a deal.