India rejected a quick interim trade agreement with the United States during talks last month, betting that a stronger economy and new trading partnerships give it room to hold out for better terms before a July 24 deadline when a temporary U.S. tariff reduction on Indian goods is set to expire.
The two sides failed to finalize a limited deal during U.S. Trade Representative Jamieson Greer’s visit to New Delhi last month, despite expectations on both sides that an agreement was within reach. An Indian government official familiar with the talks said Washington had not offered assurances on New Delhi’s central demands: a tariff advantage over competitors such as China, and no new U.S. levies once a deal is signed. “Our position is clear — we don’t intend to rush into a deal that is not on favourable terms,” the official said, adding that India would not compromise on agricultural market access.
Indian Trade Minister Piyush Goyal hardened that position further the day after the talks, telling reporters the deal would not be implemented unless India secured a clear advantage over rival exporters — a signal, officials and analysts said, that New Delhi feels little urgency despite the risk of higher tariffs.
Most Indian goods currently face a 10% U.S. tariff, a rate Washington reduced earlier this year from 50% before a Supreme Court ruling struck down Trump’s broader tariff program and forced both sides back into negotiations. That reduced rate is due to expire July 24, and the Trump administration is separately expected to introduce steeper tariffs later this month through probes into excess industrial capacity, a charge India has denied. Washington has also proposed tariffs of up to 12.5% on dozens of countries, including India, over allegations they failed to curb trade in goods made with forced labor.
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A U.S. source familiar with the talks said Washington’s view is that India must earn preferential trade treatment by making its own concessions. A separate U.S. official said Washington remained engaged and still expected an agreement, though without offering a timeline, and added that India had at times been slow and difficult in the negotiations. White House spokesman Kush Desai said the administration “continues to productively engage with Indian officials to finalise a historic trade deal.”
India’s exports rose about 15% in April-June from a year earlier despite disruptions from the war involving Iran, driven partly by pricier petroleum shipments, according to officials. Exports to Gulf countries recovered to $5.3 billion in May from $2.62 billion in March as traders shifted shipping routes, while exports to the U.S. edged up to $17.29 billion across April and May. India is also set to bring a free trade agreement with the United Kingdom into force this month and expects to conclude a separate deal with the European Union by early next year.
“Indian negotiators have gained some leverage in the talks,” said Wendy Cutler, a senior vice president at the Asia Society Policy Institute and a former U.S. trade official, citing India’s economic diversification and strategic standing. Goldman Sachs economist Santanu Sengupta said the interim U.S.-Iran peace deal had improved India’s economic outlook by easing oil prices; the bank has raised its 2026 growth forecast for India to 6.8% while lowering its inflation and current-account deficit estimates. A weaker rupee has further boosted Indian exporters’ competitiveness.
New Delhi is also calculating that some U.S. tariff measures could face legal or political setbacks, a second Indian official said. Twenty-two Democratic state attorneys general have already filed objections to the administration’s proposed forced-labor tariffs, and trade analysts said that legal uncertainty, combined with recent state election wins for Modi’s party, has reduced the political pressure on New Delhi to settle quickly. Senior leaders in Modi’s Bharatiya Janata Party have also argued publicly that any agreement must protect Indian farmers and small businesses, two constituencies New Delhi has long shielded in trade talks.
“India realises that delaying — or even abandoning — a rushed deal may be more prudent than locking into obligations whose costs could far exceed any temporary tariff relief,” said Ajay Srivastava, founder of the Global Trade Research Initiative and a former Indian trade negotiator.
Neither government has said whether a new tariff rate will be in place before the current 10% rate expires July 24.