India-US Trade Talks

Negotiations between India and the United States have been ongoing for over a year, focusing on completing a trade deal. The talks are led by US Trade Representative Jamieson Greer. The US approach highlights a carrot-and-stick strategy, with the possibility of imposing tariffs under various legislative acts.

US Tariff Policies

• The US had imposed reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA), later struck down by the Supreme Court.
• Alternative legislative measures like Section 122 have been employed, allowing 10% tariffs for 150 days, set to expire on July 24, leading to a new tariff framework under Section 301.
• India is among the few countries yet to formalize a trade deal with the US, which has already engaged with nations like the EU, Japan, South Korea, and ASEAN members.

Current Trade Scenario

• Proposed US tariffs of 12.5% on India, with Section 301 investigations including 15 other countries.
• India seeks competitive tariff rates and assurances against future Section 301 tariffs.
• India’s trade surplus with the US is declining due to reciprocal tariffs, with a significant drop from $5.02 billion in May 2025 to $2.94 billion in May this year.

Concerns and Challenges

• India worries about an influx of subsidized US agricultural imports affecting local farmers.
• US seeks to protect and revive its industrial base, while India fears increased imports of tech products will impact its trade surplus.
• India's goods trade deficit exceeds $300 billion annually.

India's Export and Import Dynamics

• US accounts for nearly 20% of India's exports, doubling from 10% in 2010-2011.
• Significant decline in petroleum product exports to the US, while imports in the same category rose sharply.
• Similar trends seen in electronic components, with decreased exports and increased imports.

Investment Impact

• Investments are slowing due to uncertainties in US tariff policies, affecting India's currency stability.
• Gross Foreign Direct Investment inflows reached a record $94.53 billion in 2025-26, though net figures remain low.
• Recent geopolitical tensions have led to significant foreign capital outflows from India.

US Perspective

Greer, known for his aggressive tariff policies, aligns with Trump's vision against perceived threats from China. He emphasizes the need for a balanced approach to global trade, addressing issues of intellectual property rights and market access disparities.