Senior officials from India and the United States have confirmed that negotiations toward a bilateral trade agreement have stalled once more. The two sides have been unable to bridge differences over tariff reductions, digital trade rules, and market access for agricultural and industrial goods. The US has pressed India to lower import duties, while India seeks greater access for its services exports and a rollback of American tariffs imposed under Section 232 and broader trade pressure measures introduced since 2018.

India and the US are each other's largest trading partners in goods and services combined, with bilateral trade exceeding $190 billion annually. Despite this scale, a formal bilateral trade agreement (BTA) has remained elusive for over two decades. The current stall reflects three structural fault lines.

First, tariffs: the US objects to India's high applied tariffs across sectors such as electronics, agriculture, and automobiles. India's average MFN (Most Favoured Nation) tariff is around 18%, among the higher rates for a G20 economy.

Second, digital trade and data localisation: the US tech industry wants unrestricted data flows and opposes India's data localisation mandates under its emerging digital policy framework.

Third, agriculture and services asymmetry: India wants the US to ease visa restrictions (particularly H-1B) for Indian IT professionals and grant greater market access to Indian agricultural exports, while resisting pressure to open its own farm sector to US competition.

The geopolitical context matters here too. The US-China rivalry has made India strategically valuable to Washington, but that leverage has not translated into trade concessions from either side. The GSP (Generalised System of Preferences) — under which India enjoyed duty-free access for about $5.6 billion worth of exports — was revoked by the US in 2019 and has not been restored, adding a persistent grievance to the negotiating table.