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AFTER day-long talks with US negotiators led by their Chief Negotiator Brendan Lynch in New Delhi, the Indian Commerce and Industry Ministry said the “discussions were positive” and the two sides “decided to intensify efforts to achieve early conclusion of a mutually beneficial trade agreement”.
A team of officials from the office of the United States Trade Representative landed in New Delhi Monday night. This is seen as a movement forward after the US “halted” trade negotiations following the imposition of an additional 25% tariffs effective August 27 on India for purchasing Russian oil.
The talks commenced at 10 am in Vanijya Bhawan where the Ministry of Commerce and Industry is situated. The Indian team was led by Special Secretary Rajesh Agarwal. At the end of the day, the Ministry said in a statement: “Acknowledging the enduring importance of bilateral trade between India and the US, the discussions were positive and forward looking covering various aspects of the trade deal. It was decided to intensify efforts to achieve early conclusion of a mutually beneficial trade agreement.
Both countries are now expected to launch the sixth round of negotiations, which was postponed last month.
With key officials in the Trump administration continuing to criticise India’s purchase of Russian oil and high protection for agricultural items, a senior government official from India said, “India’s red lines need to be recognised to reach a resolution.” There is also a need for the punitive secondary tariffs to go before any meaningful discussions can commence, sources in New Delhi indicated.
The US had imposed 25% ‘reciprocal tariffs’ with effect from August 7, and later added another punitive 25% on India for purchasing Russian oil. New Delhi felt this was uncalled for, and officials here said the US was forcing non-trade issues in its negotiations.
But with reconciliatory voices from both sides, sources in New Delhi now said a possible solution going forward could be India stepping up purchasing energy from the US while maintaining its imports from Russia. As far as US concerns on agricultural imports are concerned, India may not be in a position to import genetically modified products for human consumption, but may consider the same for animal feed.
While the Commerce Ministry officials have indicated that the talks on Tuesday will decide what the future trade talks with the US will be, exporters have said they expect the government to sign a trade deal without compromising on the red lines, as a delay could cause major losses in the US market.
New Delhi-based think tank Global Trade Research Initiative (GTRI) said any progress on the trade deal will hinge on Washington rolling back the oil-linked 25% duty. “Without that, no breakthrough is politically or economically viable,” GTRI founder Ajay Srivastava said.
“New Delhi views agriculture and dairy as livelihood issues for 700 million farmers and will not compromise them for a trade deal. India is ready to cut tariffs on over 95 per cent of US industrial exports — but only if its red lines are respected,” Srivastava said.
Talks may push India to ease patent rules, allow unfettered data flows, open e-commerce platforms, and give US firms procurement access — all sensitive areas, he said, adding that India should prepare for a long haul. “Even if India stops buying Russian oil, tariff removal is not guaranteed. Negotiations will remain slow unless Washington signals genuine flexibility,” Srivastava said.
US President Donald Trump last week had said India and America are “continuing negotiations to address the trade barriers”, and that he was “certain” there would be “no difficulty” in the talks being successful. Responding hours later, Prime Minister Narendra Modi said both countries are “natural partners” and will “work together to secure a brighter, more prosperous future”
However, the US asked G7 countries to ramp up pressure on countries buying Russian oil, to end the war in Ukraine, as per a joint statement released by the US Department of the Treasury. The statement said the US has received “commitments” from G7 countries to increase sanctions pressure on Russian oil buyers. China and India are the top buyers of Russian oil.
India has maintained that it will continue to buy Russian oil. Finance Minister Nirmala Sitharaman earlier this month said that economic and commercial considerations drive India’s oil purchases. India is the world’s third-largest consumer of crude and depends on imports to meet around 88 per cent of its requirement.
In his Independence Day speech on August 15, Prime Minister Narendra Modi had underlined India’s red lines and said it will not compromise on the well-being of Indian farmers, fisherfolk and cattle keepers. “The well-being of Indian farmers, fisherfolk and cattle keepers is our foremost priority. Modi is standing like a wall against any adverse policy that could impact Indian farmers, fisherfolk and cattle keepers,” he had said.
