By R. Suryamurthy
India’s problem with Washington is no longer how to close a trade deal. It is how to stop negotiating against itself. That distinction matters because New Delhi is approaching the most dangerous stage of the India-US trade talks: the point at which the political need to announce an agreement can become greater than the economic need to secure one.
Finance Minister Nirmala Sitharaman’s description of the negotiations as having reached a “plateau” was unusually candid. After months of claims that the two sides were close, the admission that further “giving or taking” could be “very, very difficult” suggests that the remaining disagreements are not technical wrinkles awaiting bureaucratic resolution. They are the price of the bargain.
And India should be careful about paying it. The temptation in New Delhi will be to conclude that an imperfect agreement is preferable to no agreement, particularly when the United States is India’s largest export market and American tariff policy has become increasingly unpredictable. But a bad trade agreement can be more damaging than no agreement when it converts temporary negotiating concessions into permanent market-access commitments while leaving the promised tariff benefits conditional, reversible or legally uncertain.
That is the uncomfortable arithmetic of the present negotiations. The United States wants to reduce its goods trade deficit with India, which reached about $58.4 billion in 2025, a 28 percent increase from the previous year. Washington also wants greater access for American agricultural and industrial products, along with concessions on areas such as digital trade and non-tariff barriers. India, for its part, wants preferential tariff treatment that makes its exports more competitive than those of rival suppliers and, crucially, some protection against future unilateral tariff increases.
On paper, that looks like a conventional trade negotiation. It is not. The fundamental problem is that the two sides are negotiating over different things. Washington is negotiating for greater access to the Indian market and a reduction in a bilateral trade deficit that has become politically inconvenient. New Delhi is negotiating for certainty — certainty that Indian exporters will actually receive a durable tariff advantage after making concessions today.
The second is much harder to price. The February framework had offered a path toward reducing India’s reciprocal tariff from 25 percent to 18 percent in exchange for major Indian concessions. But the US Supreme Court subsequently struck down the tariff regime that underpinned that offer. Washington has yet to provide equivalent clarity on the tariff treatment that would replace it.
That leaves India being asked to negotiate the value of something that cannot yet be clearly defined. No serious corporate board would approve a transaction on those terms. Governments should be no less demanding. The problem becomes still sharper when Russia is brought into the equation.
The US legislation authorising tariffs of up to 100 percent on countries buying significant quantities of Russian energy has effectively introduced a geopolitical escape hatch into the trade negotiations. Even if India agrees to a commercial bargain with Washington, its exporters could remain vulnerable to a new tariff imposed because New Delhi chooses to protect its energy security by buying Russian oil.
India therefore faces a peculiar proposition: make commercial concessions in return for tariff relief while accepting that the tariff relief may later be undermined by a geopolitical decision outside the trade agreement.
That is not certainty. It is exposure. The distinction is critical for Indian industry. US buyers do not make sourcing decisions on the basis of diplomatic communiqués. They price risk. If tariffs can change suddenly, if Section 301 investigations can create new exposure and if Russian-oil purchases can trigger another punitive layer, American importers have an incentive to diversify away from India even when Indian suppliers remain competitive.
That is already beginning to happen. Indian exporters have reported that US buyers are avoiding large orders and diversifying sourcing while tariff uncertainty persists. This is where the cost of delay becomes real. But it does not follow that the answer is to sign faster.
It means India should negotiate harder for certainty. The danger is that New Delhi has already spent some of its bargaining capital. Over the past two years, India has reduced duties on products of American interest, including motorcycles and bourbon, while making other policy changes relevant to US businesses. If further concessions are made before the overall bargain is settled, Washington has less incentive to offer something in return. Once a concession has been granted, it is no longer a negotiating asset. It becomes the new baseline.
This is basic bargaining economics, yet trade diplomacy often obscures it under the language of partnership. India should therefore resist the most seductive argument surrounding the talks: that because so much has already been negotiated, both sides must now produce a deal.
They do not. They must produce a deal only if the deal is better than the alternatives. And India has more alternatives than it did a few years ago. The country is negotiating and implementing other trade arrangements, diversifying export markets and attempting to position itself as an alternative manufacturing and supply-chain hub. None of this makes the US market dispensable. It does, however, reduce the logic that India must accept whatever Washington puts on the table simply because access to America is valuable.
The United States has leverage. India should not pretend otherwise. But India also has leverage that it has sometimes been reluctant to use: access to one of the world’s largest consumer markets, its growing import demand, its strategic importance to US supply chains and the broader geopolitical value Washington attaches to the relationship. The question is whether New Delhi is willing to turn that leverage into negotiating power.
A trade deficit, moreover, is not a scorecard on which one country wins and the other loses. America’s $58 billion goods deficit with India may be politically significant, but reducing it through tariffs or forced purchases does not automatically make the American economy more competitive. Nor does increasing Indian imports of US energy, aircraft or technology automatically constitute a successful trade strategy if Indian exporters lose market share because the reciprocal tariff arrangement is unstable.
Trade is not a beauty contest between import and export numbers. It is an allocation of capital, production and competitive advantage. This is why the Indian government should be wary of accepting the American premise that the bilateral goods imbalance itself requires an extraordinary concession.
India already runs much larger structural trade deficits with some partners, most notably China. Sitharaman’s comparison is instructive: if trade imbalances are to be treated as grounds for unilateral tariff pressure, the international trading system quickly becomes a competition in retaliation rather than negotiation.
That is precisely the model India should avoid. The more immediate question is what an interim deal should contain. There is a sensible middle ground between surrender and stalemate: sign only what has already been agreed, where the reciprocal benefits are measurable, and leave the politically explosive issues for a second phase.
Such a limited agreement would not be a failure. It would be a recognition that trade negotiations work better when negotiators do not pretend unresolved strategic questions have somehow disappeared. India should insist on three conditions.
First, the US tariff offer must be explicit. “Preferential access” is meaningless unless exporters know what tariff they will actually pay. Second, the benefit must be durable. India needs protection, as far as legally and politically possible, against the routine reimposition of tariffs through another US instrument. Third, concessions must be reciprocal. If India opens its market further, it should receive an identifiable improvement in access for Indian exports rather than promises of future goodwill.
The alternative is a deal in which India gives away market access today in exchange for a tariff advantage that Washington can revisit tomorrow. That would be a particularly poor bargain. The United States, of course, also risks losing from prolonged negotiations. American exporters face higher barriers in India, while US companies stand to gain from greater access to a rapidly expanding market. Former US trade official Mark Linscott has rightly noted that both sides have something to lose if no agreement is reached.
But that is precisely why India should stop behaving as though the entire cost of delay falls on New Delhi. It does not. The trade relationship will continue without a comprehensive agreement. Indian exporters will continue selling into the US market, and American companies will continue selling into India. What changes is the degree of uncertainty and the distribution of negotiating leverage.
That distinction gives New Delhi room to wait. The harder truth is that an agreement cannot insure India against every future American tariff decision. The experience of other major economies shows that even signed trade arrangements do not necessarily eliminate Washington’s willingness to deploy other legal and policy instruments when economic or geopolitical priorities change.
India should therefore negotiate not merely for lower tariffs, but for a framework that makes future coercion more expensive for both sides. That is the difference between a trade deal and a trade relationship.
The plateau may consequently be useful. It forces both governments to confront the value of what remains on the table rather than celebrating the volume of what has already been negotiated. India should not mistake diplomatic momentum for economic progress. Nor should Washington mistake India’s desire for a strong relationship for an unlimited willingness to concede.
The arithmetic is straightforward. India can make more concessions and perhaps get a deal sooner. It can also make fewer concessions and demand greater certainty, even if that means waiting. The first option produces a headline. The second may produce a better trade policy.
New Delhi should choose the latter. Because the worst possible outcome now is not no deal. It is a deal in which India has already surrendered its bargaining chips, while the United States retains the ability to change the rules after the signature.
If Washington wants a trade agreement, it should put a durable price on access to the American market. If it cannot, India should be prepared to walk away from the table — not from the relationship, not from trade and certainly not from America, but from the notion that India must keep paying for a deal before Washington has demonstrated what India is actually buying. (IPA Service)
