India has rejected a rushed interim trade agreement with the US, signaling that it is prepared to hold out for more favorable terms despite the risk of higher American tariffs.
Months of negotiations failed to produce an agreement during US Trade Representative Jamieson Greer's visit to New Delhi in June. According to an Indian government official, Washington did not provide assurances on two of India's central demands: a tariff advantage over competitors such as China and protection from additional US levies after a deal was signed.
"Our position is clear – we don't intend to rush into a deal that is not on favorable terms or compromise on red lines like ceding ground on agriculture," the official said to Reuters.
Most Indian goods currently face a ten percent US tariff, but steeper duties could be introduced later in July through investigations into excess industrial capacity and forced labor. The delay therefore leaves exporters exposed to further tariff increases and extends uncertainty for businesses on both sides.
However, India's negotiating position has strengthened. Goods exports rose by about 15 percent year on year between April and June, while exports to Gulf countries recovered to $5.3 billion in May, from $2.62 billion in March, as traders shifted to alternative shipping routes. Exports to the US also edged up to $17.29 billion during April and May.
New trade relationships are also reducing the urgency for a US agreement. A UK free trade pact is due to take effect this month, while an EU agreement is expected by early next year.
"Indian negotiators have gained some leverage in the talks, given its strong economy, diversification initiatives with other partners and its strategic standing in the world," said Wendy Cutler of the Asia Society Policy Institute.
Both countries say negotiations remain active, but India appears increasingly willing to accept short-term disruption rather than commit to obligations it believes could undermine sensitive sectors such as agriculture and small business.