India US Trade Deal Delay Reasons: Why India Isn’t Rushing a US Trade Agreement

Estimated reading time: 10 minutes

Key Takeaways

• India is carefully considering its trade deal with the US to protect domestic interests and promote the “Make in India” initiative.
• Key sectors like agriculture, pharmaceuticals, e-commerce, and IT services have unique sensitivities that require careful negotiation.
• India seeks a fair, two-way agreement and is demanding benefits like GSP restoration and visa liberalization from the US.
• India’s foreign policy of “strategic autonomy” influences its trade negotiations, aiming to balance global relationships.
• Domestic politics, including farmer and SME concerns, and election cycles, are significant factors influencing the pace of trade talks.
• The delay is a “strategic slow burn,” not a deadlock, reflecting India’s deliberate approach to securing a long-term, balanced partnership.

The relationship between India and the United States is one of the world’s most important partnerships. But when it comes to trade, things are not moving smoothly. The India US trade deal delay reasons are complex and show that India has a careful plan.

This blog post will answer the key question: why is India not rushing a US trade agreement? We will explore the many factors influencing India’s approach to US trade talks. We will also look at India’s strategic considerations for US trade negotiations. The situation is serious. The US has placed high tariffs on Indian goods, and the Indian rupee has fallen to an all-time low. This shows why India is taking its time to get the deal right.

Protecting Domestic Interests: Factors Influencing India’s Approach to US Trade Talks

One of the biggest reasons for the delay is India’s focus on protecting its own businesses and people. India’s government wants to make sure that any trade deal helps the country grow, not hurt it. This involves looking at many different industries and thinking about the long-term effects.

Make in India Overview

In 2014, India launched a big programme called “Make in India”. The goal is to turn India into a global manufacturing hub. This means encouraging companies to build factories in India, create jobs for Indian workers, and sell more Indian-made products around the world.

A quick trade deal with the US could harm this plan. If cheap US goods flood the market, new Indian companies might not be able to compete. This is why India is carefully considering every part of the deal, making sure it aligns with the “Make in India” vision.

Sector-by-Sector Sensitivities

Different parts of India’s economy have unique concerns about a US trade deal. These are some of the most sensitive areas.

• Agriculture: Farming is a way of life for millions in India. In fact, about half of all voters are connected to farming. The US wants to sell its farm products, like dairy and wheat, in India. But this could lower prices for Indian farmers and hurt their income. The government knows that unhappy farmers can lead to major protests, so it is very cautious about opening this sector.
• Pharmaceuticals: India is known as the “pharmacy of the world” because it makes affordable generic medicines for many countries. The US wants India to have stronger patent laws (intellectual property protections). This could make medicines more expensive in India and limit its ability to export cheap drugs. India must balance its role as a global medicine supplier with US demands.
• E-Commerce & Data Localization: India has rules that say data about Indian users must be stored on computers inside India. This is called data localization. The US wants to relax these rules to make it easier for American tech companies like Google and Amazon to do business. India sees these rules as vital for protecting its citizens’ data and for its national security.
• IT Services & Visa Access: India’s IT industry is a world leader, with many skilled workers. For this industry to grow, its workers need to be able to travel to the US on work visas, like the H-1B visa. The US has put limits on these visas. India wants the US to make it easier for its IT professionals to work there in exchange for opening its markets.

Tariff Protection as a Development Tool

Countries sometimes use tariffs, which are taxes on imported goods, to help their new industries grow. This is called the “infant-industry” argument. The idea is to protect a small, new company from a big, strong foreign competitor until it can stand on its own feet.

India uses tariffs to protect its growing sectors. However, the US has used tariffs as a pressure tactic. In 2025, the US put a 50% total tariff on many Indian goods. This has created a major challenge, but it also strengthens India’s belief that it needs to build strong domestic industries that are not easily shaken by outside pressures. This is a key part of India’s strategic considerations for US trade negotiations. India US Trade Deal Negotiations Progress.

Sources for this section:

• https://en.wikipedia.org/wiki/2025_United_States%E2%80%93India_diplomatic_and_trade_crisis
• https://www.newindianexpress.com/business/2025/Nov/21/us-sanctions-delay-in-trade-deal-yank-rupee-down-to-8961-cheaper-by-46-so-far-this-year

Seeking a Fair Deal: Why is India Not Rushing a US Trade Agreement

Another core reason for the slow pace is that India wants a fair and balanced agreement. India feels that the US is asking for a lot but not offering enough in return. This is a key reason why India is not rushing a US trade agreement. India believes that any deal must be a two-way street, with benefits for both sides.

US Demands Overview

The United States has a clear list of things it wants from India. These demands are at the heart of the negotiations.

• Greater market access: The US wants to sell more of its farm goods (like almonds and apples) and industrial products (like medical devices) in India.
• Lower tariffs: This means India would have to reduce the taxes it puts on American products, making them cheaper for Indian consumers.
• Stronger IP enforcement: The US wants India to tighten its patent laws to better protect American inventions, especially for medicines.
• Relaxation of data-localization: The US wants India to remove its rules requiring American tech companies to store Indian data in India.

India’s Counter-Demands

In response, India has its own list of demands. These are essential for creating a balanced deal and are major factors influencing India’s approach to US trade talks.

• Restoration of GSP Benefits: The Generalized System of Preferences (GSP) was a program that allowed India to export certain goods to the US with no tariffs. The US ended this for India. India wants the GSP benefits back as a sign of good faith.
• Visa Liberalisation: India wants the US to make it easier for its skilled professionals, especially in IT, to get work visas like the H-1B. This would help India’s services sector, which is a major part of its economy.
• Energy Sovereignty: India needs a lot of energy to power its growth. It has been buying oil from Russia at a discount. The US has criticized this and linked its tariffs to India’s Russian oil imports. India says it has the right to buy energy from wherever it wants to secure its needs. Unpacking Putin’s Bold Claims: 3 Key Insights into Russia-India Economic Cooperation. Trump’s Russia Oil Claim Sparks Diplomatic Firestorm; MEA Denies Call; China’s Rare Earth Move Looms Large.

Reciprocity as a Negotiation Lever

India will not agree to “one-sided” concessions. The goal is to achieve a “balanced agreement” where both countries give and get something of value. India is using its large and growing market as a powerful negotiation tool. It is telling the US that access to over a billion consumers will only come if India’s own needs are met.

This careful strategy shows that India sees itself as an equal partner, not just a market for American goods.

The Cost of Premature Concessions

Giving in too early or too easily would be a mistake for India. If India accepts a deal under pressure from US tariffs, it sets a dangerous precedent. It would signal to the US and other countries that India can be forced into deals that are not in its best interest.

For example, if the US successfully uses tariffs to influence India’s foreign policy on buying Russian oil, it might try to do so again on other issues. This is why India’s strategic considerations for US trade negotiations involve thinking about the long-term impact on its independence.

Sources for this section:

• https://en.wikipedia.org/wiki/2025_United_States%E2%80%93India_diplomatic_and_trade_crisis
• https://www.cfr.org/article/why-us-india-trade-deal-makes-sense

Global Standing and Alliances: India’s Strategic Considerations for US Trade Negotiations

India’s approach to the US trade deal is not just about economics. It is also about its place in the world. India’s strategic considerations for US trade negotiations involve balancing its relationships with many different countries and protecting its ability to make its own decisions.

Strategic Autonomy Doctrine

India has a long-standing foreign policy of “strategic autonomy.” This means India does not want to be locked into an alliance with any single country or power bloc. It wants the freedom to be friends with everyone and make decisions based on its own interests. This idea goes back to the Non-Aligned Movement during the Cold War.

A deep trade deal with the US could pull India too tightly into America’s orbit. This might limit its flexibility to work with other countries like Russia or its partners in Europe and Asia. Unpacking Putin’s Bold Claims: 3 Key Insights into Russia-India Economic Cooperation.

Quad & Indo-Pacific Dynamics

India is a key member of the Quadrilateral Security Dialogue, or the Quad, along with the US, Japan, and Australia. This group works together to ensure a free and open Indo-Pacific region. G20: India, Canada, Australia Collaboration On Innovation.

While India values this partnership, rushing into a one-sided trade deal with the US could weaken its position within the Quad. It might make India look like a junior partner rather than an equal. By negotiating carefully, India shows it is a strong, independent power that adds value to the group.

BRICS Membership

India is also a founding member of BRICS, a group that includes Brazil, Russia, China, and South Africa. The US has used India’s ties with Russia, a BRICS partner, as a reason for imposing tariffs. Unpacking Putin’s Bold Claims: 3 Key Insights into Russia-India Economic Cooperation.

This puts India in a tough spot. It has to manage its relationship with its BRICS partners while also dealing with US pressure. Giving in to the US on this front would undermine India’s commitment to strategic autonomy.

Parallel Free Trade Agreements (FTAs)

The US is not the only country India is talking to. India is also negotiating trade deals with the European Union, the United Kingdom, and Australia. PM Starmer’s Visit Usher in New Era of Strategic Partnership.

A rushed deal with the US might include rules that conflict with these other agreements. For example, rules about where a product’s parts can come from (“rules of origin”) could make it harder to trade with the EU or UK. This is another reason why India is not rushing a US trade agreement; it needs to make sure all its trade deals can work together.

The Risk of Strategic Lock-In

Signing a big trade deal is like getting married—it creates a “policy lock-in.” It makes it very difficult to change course later. The 2025 tariff crisis is a perfect example of how the US can use trade to pressure India on other issues. India US Trade Deal Negotiations Progress.

By taking its time, India is avoiding being locked into a relationship where it could be easily pushed around. This caution is central to the factors influencing India’s approach to US trade talks.

Sources for this section:

• https://en.wikipedia.org/wiki/2025_United_States%E2%80%93India_diplomatic_and_trade_crisis

Domestic Politics and Elections: More Factors Influencing India’s Approach to US Trade Talks

Finally, the delay is also about politics at home. The Indian government has to listen to its people and its businesses. A trade deal that is unpopular could cause major problems for the ruling party. These domestic issues are important factors influencing India’s approach to US trade talks.

Agricultural Lobby & Farmer Protests

As mentioned before, farmers are a huge and powerful group in India. The memory of the large-scale farmer protests in 2020-2021 against new farm laws is still fresh.

Any trade deal that is seen as hurting farmers would trigger massive political opposition. No government wants to risk that. This political reality is a major reason why talks, especially on agriculture, are moving slowly.

SME Concerns

Small and Medium-sized Enterprises (SMEs) are the backbone of India’s economy. These are businesses with 200 or fewer employees. They create millions of jobs.

Many SMEs worry they cannot compete with large American companies that have more money and better technology. They fear a trade deal without proper safeguards could put them out of business. The government must address these fears to avoid economic disruption and political backlash. Automation Systems & Services Guide.

Election Timing

India has a busy election calendar, with national elections every five years (next in 2029) and important state elections happening all the time. Governments usually avoid making big, controversial decisions like signing a trade deal right before an election. Bihar Election Result Analysis PDF Download. Chirag Paswan Father Vision Bihar 2025. Nitish Kumar JDU Leader Bihar. Nitish Kumar 10th Oath Bihar CM.

A trade deal with the US would be closely examined by voters and the opposition. If it contains unpopular clauses, it could become a major issue during a campaign. This makes timing everything.

US Election Cycle Influence

It’s not just India’s elections that matter. US politics also play a big role. Different US presidents can have very different ideas about trade. The policies under President Trump were different from those under President Biden.

India prefers to make a stable, long-term deal that won’t be suddenly changed after the next US election. Rushing into an agreement that might be reversed in a few years is not a smart move. This makes India’s strategic considerations for US trade negotiations even more complex.

Legislative Hurdles

Even if the leaders agree on a deal, it’s not final. Major changes, like to data protection laws or patent rules, must be approved by India’s Parliament. This can be a long and difficult process.

The government needs to be sure it has enough support in Parliament to pass these changes. This requires building consensus, which takes time. US pressure has led to huge economic pain, including a $16.5 billion capital outflow and pressure on major companies like Reliance Industries to stop importing Russian oil, making any concessions politically difficult. India US Trade Deal Negotiations Progress. Unpacking Putin’s Bold Claims: 3 Key Insights into Russia-India Economic Cooperation.

Sources for this section:

• https://www.newindianexpress.com/business/2025/Nov/21/us-sanctions-delay-in-trade-deal-yank-rupee-down-to-8961-cheaper-by-46-so-far-this-year

Synthesis – The “Strategic Slow Burn”

Putting it all together, the India US trade deal delay reasons are not about one single problem. It is a mix of interlocking factors: protecting domestic industries, demanding a fair deal, balancing global relationships, and managing politics at home.

India’s approach can be described as a “strategic slow burn.” This is not a deadlock or a failure. It is a deliberate, careful, and measured pace. The factors influencing India’s approach to US trade talks are deep and varied. India’s strategic considerations for US trade negotiations are focused on creating a balanced, long-term partnership that works for India, not just for the US. India US Trade Deal Negotiations Progress.

By moving slowly, India is sending a clear message: it is a major global power that will negotiate on its own terms and at its own pace.

Conclusion

The India US trade deal delay reasons show a country that is playing the long game. India’s cautious approach is not a sign of weakness but a calculated strategy to protect its economic independence, maintain its strategic autonomy, and listen to the needs of its people.

The answer to why is India not rushing a US trade agreement is that it is carefully building a foundation for its future. While negotiations will continue, India will set the tempo, ensuring that any eventual agreement aligns with its long-term national interests.