India is likely to delay the signing of a proposed trade agreement with the United States for several months, according to multiple government sources, after fresh investigations launched by the administration of US President Donald Trump added a new layer of complexity to the negotiations.
Officials familiar with the matter said New Delhi has adopted a cautious “wait and watch” approach as Washington reassesses tariff policies and investigates what it describes as excess manufacturing capacity among several trading partners, including India, reported Reuters.
The development signals that trade discussions between the two countries, which had gathered momentum earlier this year, may now take longer to conclude than previously expected.
Interim Deal Timeline Faces Delay
According to four Indian government sources cited in the report, New Delhi had initially expected to sign an interim trade agreement with Washington in March, followed by negotiations toward a broader and more comprehensive deal later.
Those expectations were shaped by discussions in early February when President Trump agreed to reduce steep tariffs on Indian imports. The tariff cuts were linked to a series of commitments from India, including lowering duties on certain US goods and increasing purchases of American products.
However, the timeline for signing the agreement has now slipped, and the deal may take several more months to finalise, the report said.
US Investigation Adds Fresh Friction
The slowdown in talks comes after Washington launched a new investigation into what it describes as “structural excess capacity and production in manufacturing sectors” among 16 trading partners, including India.
The probe has been initiated under Section 301 of the US Trade Act of 1974, a legal provision that allows Washington to investigate trade practices it considers unfair.
One Indian official said the investigation had introduced uncertainty into the negotiation process.
“We are not in a hurry to sign any deal,” the source said, adding that the probe appeared to be a pressure tactic designed to push countries into signing agreements following a recent court ruling on tariffs.
“It’s a spanner in the works,” the official said.
India is expected to present its position to the Office of the United States Trade Representative if the opportunity arises. If necessary, officials said New Delhi could also consider approaching the World Trade Organisation after the investigation concludes.
Tariff Policy Shifts Complicate Talks
Another factor slowing progress has been changes in the US tariff policy.
According to the report, negotiations lost momentum after the US Supreme Court in late February struck down a set of tariffs imposed by the Trump administration. Since then, there have been few substantive discussions between the two sides.
At the same time, Washington has been increasingly focused on the geopolitical crisis involving Iran, which has also diverted attention away from trade negotiations.
Following the court ruling, President Trump imposed a temporary 10 per cent tariff on imports from all countries until July 24. The move has added uncertainty for countries negotiating separate trade arrangements with the United States.
Under the earlier framework agreement between New Delhi and Washington, Indian exports to the United States were expected to face tariffs of around 18 per cent.
Indian officials are now seeking clarity on whether that rate would still apply or whether Washington may impose a different level of duties under its evolving tariff framework.
Russia Oil Issue Also In Focus
Energy policy has also featured in discussions between the two countries.
Earlier conversations between New Delhi and Washington included expectations that India would curb purchases of Russian crude oil. However, sources said India did not completely halt such imports and instead only slowed them.
US officials have since urged India to increase purchases of American energy supplies as global markets tighten amid the ongoing conflict involving Iran.
India has said it is focused on diversifying its energy sources rather than committing to specific supply arrangements.
US Signals Expectation That Commitments Will Be Honoured
Despite the slowdown in negotiations, US officials have indicated that they expect progress to continue.
US ambassador to India Sergio Gor said Washington believes the trade arrangement would ultimately benefit both countries.
“So we fully expect the nations that we’ve made deals with to honour those deals,” Gor said at a conclave organised by the India Today media group.
“I think India will do that because it’s not just about honouring it, it’s a win-win situation,” he added.
Analysts Say Delay May Be Strategic
Some trade experts say India’s cautious approach may be justified given the evolving tariff environment in the United States.
For now, Indian officials appear inclined to observe how US trade policy develops before committing to a formal agreement.
With tariff investigations underway and geopolitical developments influencing economic policy in Washington, New Delhi may prefer to keep negotiations open rather than rush into a deal whose terms could change.
