US and Indian negotiators begin fresh trade talks as tariffs hit exports and growth, with Russian oil purchases and agriculture key sticking points.
MUMBAI: US and Indian trade negotiators began two days of talks on Wednesday seeking an elusive deal amid geopolitical turbulence.
The talks follow Washington’s imposition of 50% tariffs on most Indian goods in August, a move US officials linked to New Delhi’s purchases of discounted Russian oil.
Deputy US Trade Representative Rick Switzer’s visit comes a week after Prime Minister Narendra Modi hosted Russian President Vladimir Putin in New Delhi.
India’s foreign ministry described Switzer’s meetings as a “familiarisation” trip.
India is one of the few major economies still without a trade agreement with the US, raising risks for jobs, economic growth and markets.
The world’s fastest-growing major economy recorded a RM215.8 billion goods trade deficit with the United States in 2024.
Large export categories like smartphones and generic drugs are exempt from tariffs, but many labour-intensive industries are not.
Exports fell nearly 12% year-on-year in October, driven by a plunge in US-bound shipments.
The Global Trade Research Initiative estimates labour-heavy sectors saw export drops of 37–60% between May and September.
Foreign investors have dumped more than RM75.2 billion in Indian equities this year, helping push the rupee to a record low.
The International Monetary Fund has cut India’s 2026-27 growth forecast from 6.4% to 6.2%, assuming prolonged US tariffs.
India enthusiastically bought discounted Russian crude after the 2022 invasion of Ukraine.
Roughly half of the US tariff burden stems from Washington’s attempt to penalise those purchases.
President Donald Trump has repeatedly claimed India plans to stop buying Russian oil, a claim New Delhi has neither confirmed nor denied.
Top buyer Reliance Industries said in November it stopped importing Russian oil for its export-focused refinery.
Analysts at Kpler expect a “notable dip” in India’s December–January imports.
Talks have also stalled over agriculture, with India resisting pressure to cut tariffs on staples like rice and wheat.
A senior Indian commerce ministry official said these issues are “largely resolved”, although Trump criticised India for “dumping” rice.
Negotiating a trade pact is complicated by the need to address Trump’s reciprocal tariffs.
“These are two separate, parallel negotiations that are going on, but one will feed into another,” Commerce Secretary Rajesh Agrawal said.
Relations have improved since August, with several smaller deals advancing.
That includes US approval for two arms sales worth nearly RM437 million.
New Delhi also signed a “significant” deal for the US to supply nearly 10% of its liquefied petroleum gas imports.
Energy commitments have anchored past US trade deals, and experts say the LPG contract may help convince Washington India is reducing its reliance on Russia.
