India-US Trade Talks Resume: Five Issues That Could Make or Break the Deal
A delegation from the United States, led by US Trade Representative Brendan Lynch, arrived in New Delhi on Tuesday (September 16) to revive stalled bilateral trade talks with India. This marks the first in-person engagement since the previous talks collapsed, following US President Donald Trump’s imposition of 50% tariffs on Indian goods. The delegation is expected to stay only for a day, adding suspense over the outcome.
Even before the initial 25% tariffs on India came into effect, Trump had added another 25% targeting New Delhi’s trade with Russia. As the trade discussions resume, here are five key aspects under the spotlight:
1. Trump’s 50% Tariffs on India
A central focus of the talks is whether the US will roll back the 50% tariffs, which have strained trade and diplomatic ties built over three-and-a-half decades. While the first 25% tariff aimed to address the trade deficit, the second was imposed to discourage India from trading with Russia.
India has maintained that it will prioritize its strategic and economic interests, continuing to source oil from affordable suppliers.
2. India’s Stance on Russian Oil Imports
It remains uncertain whether the US will treat Russian oil imports as a trade matter or a separate geopolitical issue. India is unlikely to halt Russian oil purchases, which constitute 35–40% of its intake, despite Trump accusing India of indirectly funding Russia’s war in Ukraine.
India’s chief negotiator Rajesh Agarwal emphasized that only trade-related matters would be discussed.
However, Trump’s nominee for Ambassador to India, Sergio Gor, stated that ending Russian oil imports is a “top priority,” while US Commerce Secretary Howard Lutnick suggested it could be a precondition for any trade deal.
3. US Access to India’s Agriculture and Dairy Markets
US demands for greater access to India’s agricultural and dairy markets remain a major bone of contention. India has consistently resisted, citing the need to protect farmers’ livelihoods and cultural sensitivities, especially regarding dairy products.
The Indian government may consider limited imports, such as premium cheese or genetically modified corn, to avoid disrupting domestic markets. Previous rounds of talks since March saw India refuse to open sensitive sectors due to economic, cultural, and health concerns.
4. India’s Digital Services Tax and Data Rules
US concerns over India’s digital services tax (DST) and data localization rules could also resurface. Trump had threatened fresh tariffs on countries imposing digital taxes on American tech companies.
India phased out its unilateral DST (Equalisation Levy) in April 2025 under the OECD two-pillar framework, shifting taxation to the customer’s location. Data localization rules still require local storage of certain financial and personal data, with strict enforcement in sectors such as finance.
5. India-US Bilateral Trade Agreement by November?
Commerce Minister Piyush Goyal expressed optimism, suggesting the first tranche of a trade deal could be finalized by November 2025.
Despite efforts, finalizing a bilateral trade deal by November 2025 appears ambitious amid growing tensions. Both nations will need to navigate sensitive issues such as tariffs, Russian oil, agriculture, and digital taxation to ensure concrete progress within the timeline.
