US and Indian trade negotiators have begun a two‑day meeting aimed at reaching a trade agreement amid ongoing geopolitical tensions. The talks follow the United States’ imposition of a 50 % tariff on most Indian goods in August, which the US justified by citing India’s purchase of discounted Russian oil that it says helps fund Moscow’s war in Ukraine.
India has continued to buy Russian oil, and Prime Minister Narendra Modi recently met Russian President Vladimir Putin in New Delhi. Deputy US Trade Representative Rick Switzer’s visit is intended to address the dispute and seek a resolution. India, the world’s fastest‑growing major economy, recorded a $45.8 billion goods trade deficit with the US in 2024. Its exports—particularly labor‑intensive sectors such as gems, jewelry and textiles—have been hit hard by the tariffs, with the Global Trade Research Initiative estimating export declines of 37‑60 % between May and September.
The dispute carries significant economic implications. The International Monetary Fund has lowered India’s 2026‑27 growth forecast from 6.4 % to 6.2 %, noting that the tariffs could shave up to 80 basis points off growth by curbing exports. Foreign investors have already withdrawn more than $16 billion from Indian equities this year, contributing to a record‑low rupee.
The US has linked its trade policy to geopolitics, with roughly half of the tariff burden tied to India’s Russian oil purchases. India has neither confirmed nor denied plans to cease buying Russian oil, despite US President Donald Trump’s claim that imports have largely stopped. Putin has offered uninterrupted fuel shipments to India, raising concerns about India’s willingness to reduce reliance on Russian oil.
Other issues, such as agriculture, have also stalled the talks. India has resisted pressure to cut tariffs on staples like rice and wheat, fearing backlash from its farmers. A senior Indian commerce ministry official says these matters are “largely resolved,” yet Trump has accused India of “dumping” rice into the US market.
Despite these challenges, US‑India relations have improved since August, with several smaller deals moving forward. The US has approved arms sales worth nearly $93 million, and India has signed a major agreement for the US to supply almost 10 % of its liquefied petroleum gas imports. Experts believe that these energy commitments could persuade Washington that India is reducing its dependence on Russia, potentially opening the door to a breakthrough in trade negotiations.
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