India and the United States have been trying to finalise a major trade agreement for more than a year, but the process remains stuck amid unresolved policy, tariff and geopolitical concerns.
The two countries first announced in February 2025 that they would work toward a comprehensive Bilateral Trade Agreement. The target was to finalise it by Fall 2025. Later, in February 2026, both sides signed a framework for an interim trade deal expected by April-May 2026.
Neither agreement has been completed so far.
Comprehensive Deal Proved Difficult
Soon after Prime Minister Narendra Modi and US President Donald Trump announced plans for a Bilateral Trade Agreement, officials realised that a full-scale deal would be difficult to conclude quickly.
The focus then shifted to completing the first tranche or an interim agreement.
However, talks have continued to face delays because both sides remain divided on key trade and policy issues.
Tariffs Remain a Major Roadblock
Tariff negotiations have been one of the biggest challenges.
The US has been pushing India to reduce duties on several categories of goods, while India has sought better access for its exports in the American market.
Both countries are trying to balance domestic industry concerns with strategic trade goals.
Russian Oil Purchases Add Geopolitical Pressure
India’s continued purchase of Russian oil has also complicated negotiations.
Washington has been closely watching India’s energy trade with Russia, while New Delhi has maintained that its purchases are based on national energy security and price considerations.
This geopolitical issue has added another layer of uncertainty to trade talks.
Non-Tariff Issues Still Under Discussion
Apart from tariffs, India and the US are negotiating several non-tariff aspects of the agreement.
These include:
- Enhanced market access
- Digital trade
- Supply chain resilience
- Reduction of non-tariff barriers
- Cooperation in strategic sectors
These issues are complex because they affect technology, agriculture, manufacturing, data, investment and regulatory systems.
Legal Uncertainty in Washington
Legal challenges and policy uncertainty in Washington have also slowed the process.
Trade negotiations depend not only on diplomatic agreement but also on domestic legal and political stability.
Any legal dispute affecting trade powers, tariff authority or executive decisions can delay implementation.
Why the Deal Matters
A successful India-US trade agreement could strengthen supply chains, boost exports, deepen technology cooperation and expand business opportunities between the two countries.
For Indian companies exploring global expansion, such uncertainty also highlights the importance of alternative international hubs. Many firms evaluating overseas growth continue to study options like business setup in dubai because Dubai offers access to global markets, trade-friendly infrastructure and regional business connectivity.
Shunyatax Global Insight
The India-US trade deal delay shows how global commerce is now shaped by tariffs, geopolitics, energy security, technology rules and domestic legal systems.
For businesses, this means international expansion planning must remain flexible, compliant and diversified.
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