By T N Ashok
NEW YORK: India and the United States are approaching a decisive phase in negotiations over a bilateral trade agreement that could reshape commercial relations between the world’s largest economy and one of its fastest-growing major markets. Yet the final stretch is proving less straightforward than the political rhetoric surrounding the proposed $500 billion trade relationship suggests.
The first phase of the agreement is undergoing legal drafting, Indian officials said in October, after a framework announced in February brought a substantial reduction in punitive American tariffs on Indian exports. But the negotiations have repeatedly encountered obstacles, from Washington’s demand for greater access to India’s agricultural market to New Delhi’s insistence on protecting vulnerable farmers and securing predictable access for its labour-intensive exports.
The central question is whether President Donald Trump and Prime Minister Narendra Modi can translate their strategic partnership into a commercial settlement without forcing either government into politically damaging concessions. Reuters reported on October 29 that India was close to finalising the first phase, while Commerce Minister Piyush Goyal insisted that farmers’ sensitive interests would not be compromised. The agreement, however, remained unsigned.
The figure at the heart of the negotiations requires careful interpretation. Under the February 6 framework, India expressed its intention to purchase $500 billion worth of American products over five years, covering energy, aircraft and aircraft parts, precious metals, technology products and coking coal. The two countries also committed to expanding cooperation in data-centre equipment, graphics processing units and other advanced technologies.
This is a purchasing ambition, not a confirmed $500 billion trade surplus for America, nor an announcement that India will buy that amount of agricultural produce. The commitment spans several industrial and strategic categories, and the official framework does not establish that every dollar represents a legally binding purchase order.
Agriculture remains the hardest issue because the consequences of tariff reductions extend well beyond trade statistics. Millions of Indian households depend on farming, and even a limited opening to heavily subsidised imports can create anxiety over prices, farm incomes and the government’s commitment to rural livelihoods.
The February framework envisaged Indian tariff reductions on selected American agricultural and food products, including tree nuts, fresh and processed fruit, soybean oil, dried distillers’ grains and red sorghum for animal feed. The two governments also agreed to address non-tariff barriers affecting American agricultural exports.
These provisions have alarmed Indian farm organisations. The Samyukt Kisan Morcha, a coalition of more than 100 farm groups, has criticised the proposed concessions and demanded that the agreement be withdrawn. Farmers fear that imports produced by highly mechanized American agriculture could undermine domestic prices, particularly where Indian producers have thinner financial margins.
The government’s response is that market access will be calibrated and sensitive interests protected. Goyal has publicly assured farmers that India will not sacrifice their interests.
The distinction between individual product categories will be decisive. Lower duties on selected nuts, fruits or industrial agricultural inputs are not equivalent to unrestricted access for wheat, rice, dairy, poultry or other politically sensitive commodities. But even products that appear marginal in the overall trade balance can become contentious when their imports affect particular farming regions.
The final text will therefore be judged not simply by the number of tariffs reduced, but by which products receive exemptions, which are subject to quotas, and whether safeguards can be activated when imports threaten domestic producers.
For Modi, the political calculation is delicate: the economic benefits of a deal must be weighed against the possibility of renewed rural discontent. For Trump, agricultural access is an important way to demonstrate that trade negotiations deliver tangible opportunities for American producers.
American agriculture adds another layer of complexity. China has historically been a major buyer of US soybeans, making Chinese demand a critical influence on farm revenues, prices and export logistics. When Chinese purchases weaken or shift towards alternative suppliers, American farmers face pressure to find replacement markets.
Wisconsin’s agricultural economy includes soybean producers, although the state’s farm profile is more diversified than that of major Midwestern soybean powerhouses such as Iowa and Illinois. Any claim that Wisconsin farmers are the worst affected by China’s reduced soybean imports requires careful verification; the effects differ by crop, state and export exposure.
India may appear to offer Washington an alternative market, but it cannot simply replace China’s scale of demand. Indian oilseed farmers and edible-oil consumers have competing interests, while tariff protection and domestic agricultural policy constrain the scope for large import increases.
The negotiations consequently expose a basic limit to trade diplomacy: an alternative market can help diversify exports, but it cannot automatically compensate American producers for a loss of demand from a major trading partner. Nor can India be expected to absorb surplus production without regard to its own farm economy.
For Washington, the opportunity lies in securing incremental, commercially viable access. For New Delhi, the objective is to avoid becoming a dumping ground for surplus produce while permitting imports that genuinely serve consumers and industry.
If agriculture represents the principal political risk for India, technology is among its most important potential gains. New Delhi wants greater access to semiconductors, advanced computing, data-centre equipment and other frontier technologies that underpin artificial intelligence, digital infrastructure, manufacturing and defence-related innovation. The February framework specifically identified graphics processing units and other products used in data centres as areas for increased trade and cooperation.
This matters because India’s ambitions extend beyond importing finished electronics. It wants to strengthen domestic manufacturing, attract investment, develop semiconductor capabilities and build more resilient supply chains. Access to American technology, expertise and equipment could support these goals, provided commercial agreements are accompanied by predictable export licensing and investment conditions.
The United States, for its part, wants stronger supply-chain cooperation and closer coordination on export controls, investment screening and the policies of third countries. The framework envisages rules of origin designed to ensure that the agreement’s benefits accrue primarily to the two partners.
The remaining question is how far the final agreement can move beyond broad commitments. Semiconductor trade is affected by national-security controls, licensing requirements and restrictions on sensitive equipment. A tariff concession alone cannot guarantee access to every advanced chip or manufacturing technology.
For India, the prize is therefore not simply cheaper imports. It is a more dependable pathway into high-value technology supply chains, with opportunities for Indian businesses to participate in production, services and innovation.
India also wants more predictable access for two important export sectors: generic pharmaceuticals and gems and jewellery. The February framework envisaged removing reciprocal tariffs on a range of Indian goods, including generic pharmaceuticals, gems and diamonds, subject to successful completion of the interim agreement. Pharmaceutical treatment also remains connected to the outcome of a US investigation under Section 232, which concerns national-security-related import measures.
Energy has been a major source of friction between Washington and New Delhi. India increased purchases of discounted Russian crude after Russia’s invasion of Ukraine, arguing that affordable energy was essential for its large population and growing economy. The Trump administration, however, has used tariffs and the threat of sanctions to press New Delhi to reduce its reliance on Russian supplies.
A significant opening emerged on October 16, when Trump issued an executive order waiving key Russia-related sanctions and tariff measures that could have exposed Indian goods to duties of up to 100%. The decision eased immediate pressure on India and improved the prospects for a trade settlement. US Secretary of State Marco Rubio subsequently described the trade agreement as very close to completion.
The waiver should not, however, be interpreted as a permanent American endorsement of India’s Russian oil policy. It is a reprieve from immediate pressure, leaving Washington room to revisit sanctions and tariffs depending on developments in energy purchases, national security and the wider relationship.
For New Delhi, flexibility is important. Rapidly replacing Russian crude with more expensive alternatives could increase import costs, put pressure on inflation and complicate the government’s fiscal calculations. For Washington, a negotiated reduction in friction offers a way to strengthen ties with a strategically important Indo-Pacific partner without abandoning its pressure on Moscow.
The oil question also illustrates why the negotiations cannot be reduced to a simple exchange of tariffs. Energy security, geopolitical alignment and commercial interests are intertwined.
The February 6 joint statement provides the clearest public outline of the proposed bargain. It envisages an 18% reciprocal tariff on many Indian exports, subject to the framework’s conditions, alongside further tariff relief for selected products once the interim agreement is successfully concluded. It also covers market access, non-tariff barriers, digital trade and supply-chain cooperation.
India has agreed in principle to address American concerns over medical-device access, information and communications technology imports, standards and agricultural barriers. Washington has outlined concessions for generic medicines, gems and diamonds, aircraft parts and selected other products, although some benefits depend on further legal or regulatory steps.
For India, securing a predictable tariff regime matters as much as winning headline concessions. For the United States, enforceable access to selected markets and credible progress towards the $500 billion purchasing ambition are central to demonstrating that the agreement delivers tangible returns.
The agreement’s economic logic is clear. American energy, aircraft and technology exports could expand; Indian manufacturers and service providers could gain more predictable access to the US market; and both governments could reduce friction in strategically important supply chains.
Yet the political risks are unevenly distributed. American technology exporters and energy suppliers stand to benefit from a larger Indian market, while American farmers need alternative buyers when Chinese demand weakens. Indian exporters want tariff relief, but Indian farmers fear that cheaper imports could undermine their livelihoods.
China’s soybean trade offers a warning against assuming that market diversification can quickly solve agricultural problems. Media reports in October suggested that Chinese imports of US soybeans had recovered from zero in September 2025 to 360,878 metric tonnes in September 2026, yet US shipments to China remained down 34% over the first nine months of the year. Chinese buyers continued to rely heavily on Brazil.
India cannot simply substitute for China on the scale American soybean producers might want. Nor can New Delhi ignore the domestic political costs of opening its farm market.
Ultimately, the success of the India–US agreement will depend on whether both leaders can sell the outcome at home. Modi must demonstrate that improved access to technology and American consumers outweighs the risks to vulnerable producers. Trump must show that the deal expands US exports and produces concrete benefits for American industry and agriculture.
The $500 billion ambition gives the negotiations their headline. But the agreement’s real significance will be determined by its fine print: how much access India actually gains, which American agricultural products can enter, how reliably Indian exporters are protected from abrupt tariff changes, and whether the Russian oil dispute remains a recurring source of tension.
A successful settlement would deepen commercial ties between two strategic partners. A poorly balanced one could simply relocate the conflict—from tariffs and oil sanctions to Indian farms, American soybean fields and the next round of trade negotiations. The final draft, when published, will reveal whether Washington and New Delhi have built a durable economic partnership—or merely negotiated a temporary truce. (IPA Service)
