India-US Trade Deal Remains Possible but Unlikely in Near Term

• India and the United States (U.S.) continue to make progress towards a narrow interim trade agreement, although a near-term breakthrough appears unlikely as differences remain over market access, agriculture, India’s purchases of US goods and its bilateral trade surplus. BMI expects both sides to eventually reach an agreement, but negotiations have reached a “plateau” as the remaining issues are among the most difficult to resolve.
• The main sticking points remain agricultural market access and India’s willingness to reduce trade barriers. India is likely to resist significant concessions unless Washington offers meaningful preferential access for Indian exports, while opening its dairy and genetically modified agricultural markets would carry particularly high domestic political costs.
• Meanwhile, India’s continued reliance on Russian oil has added another obstacle to negotiations. Russia accounted for approximately 50.8% of India’s crude oil import volumes in July 2026, while the new U.S. sanctions regime could expose purchasers of Russian energy to additional tariffs of up to 100%. This increases the potential cost of maintaining India’s current purchasing arrangements and could become a key point of leverage for Washington.
• Nevertheless, a narrow agreement remains possible if both governments defer their most contentious issues. India could reduce tariffs on selected U.S. agricultural and industrial products and commit to larger purchases, while Washington could provide preferential treatment for selected Indian exports without immediately resolving disputes surrounding dairy, genetically modified products and other regulatory barriers.
• The economic benefits of an agreement would likely stem more from reduced policy uncertainty than from a significant near-term increase in trade. A settlement would improve visibility for exporters and investors and reduce the risk of renewed tariff escalation, although the direct trade impact would likely remain modest given the current tariff rate and potentially narrow product coverage.
• Looking ahead, BMI expects negotiations to continue through the December 14–15 G20 Summit in Miami, although an agreement by then remains unlikely. Furthermore, the implementation of the new Russia sanctions regime in mid-October and the unresolved U.S. investigation into India’s manufacturing overcapacity will be important developments to monitor, as both could influence Washington’s negotiating position.

(Source: BMI, A Fitch Solutions Company)