India's Trade Stance and Negotiation Leverage with the United States

India isn't rushing into that interim trade aGreement with the United States. That’s where the Narendra Modi government stands, apparently. They feel their bargaining position has actually gotten stronger lately. Things are looking up economically, there are more trade partnerships forming, and external risks seem a little less scary. Government officials and analysts are pointing in that direction.

But negotiations have been dragging on for months. There were expectations you know, after Jamieson Greer’s visit to New Delhi last month, people thought an interim pact was almost done. But it just didn't happen. The sides remained stuck on some core issues. Big disaGreements kept everything stalled.

India refused to accept a deal that just slid through without addressing what they really wanted. They weren't going to compromise on their red lines. This meant demanding better tariff treatment over other big exporters, like China, and making sure Washington wouldn't slap fresh tariffs on things after signing anything. Protecting the agricultural sectors was absolutely non-negotiable for Indian negotiators.

The reality is, the US really hoped to grab quick trade concessions from India before President Trump’s proposed new tariffs kicked in later this month. But New Delhi didn't seem to feel that immediate pressure. They showed little real urgency even when there were threats of higher duties on Indian exports hanging over them.

A day after Greer left, Commerce and Industry Minister Piyush Goyal also made it clear. He signaled India’s tougher stance. Any deal with the US would only work if it seriously benefited India first.

The current situation involves a 10 per cent tariff on most Indian goods going to the US. That's the baseline. But then you have the threat: the Trump administration is expected to start introducing steeper tariffs soon, based on investigations into industrial capacity. Separately, Washington has been floating ideas about additional tariffs up to 12.5 per cent on some countries, including India based on allegations about forced labor. India flatly denied those charges, of course.

A US source familiar with the backroom talks mentioned something interesting. They felt India needed to earn that preferential treatment it was seeking by making its own concessions. It’s a classic power move, isn't it?

Trade analysts are watching this closely. They see that India’s leverage has grown considerably over these last few months. Things are shifting. Indian goods exports actually ticked up about 15 per cent year-on-year in the April-June quarter. That was helped by better petroleum shipments, which eased some of the Iran conflict headaches. Exports to Gulf nations bounced back to pre-war levels too. And shipping to the US increased as well.

Meanwhile, India isn't just looking west anymore. They are diversifying their trade options. The free trade aGreement with the UK is due to start this month. Negotiations for a pact with the European Union are moving forward; that could wrap up early next year.

Wendy Cutler, who used to work in trade circles and is now at the Asia Society Policy Institute, said Indian negotiators gained some real leverage. Why? Because of the strong economy, the push toward other partners, and their strategic standing globally. It’s a different dynamic entirely.

India’s overall economic outlook also feels better now. That easing around oil prices from the US-Iran peace deal definitely helped ease concerns. Goldman Sachs adjusted its growth forecast for India to 6.8 per cent, dropping inflation and current account deficit projections. This suggests there's more breathing room for the government to hold out for terms that actually matter.

It seems like some of these moves are about calculation. Officials believe delaying or even ditching a rushed deal might be smarter than locking into obligations whose costs could blow past any temporary tariff relief offered now. Ajay Srivastava, who founded the Global Trade Research Initiative and used to negotiate deals, put it plainly: that's the more prudent path.

On the political side too, things are playing out at home. Prime Minister Modi’s recent electoral wins have definitely bolstered the government’s hand at the negotiating table. BJP leaders keep arguing that any deal has to protect Indian farmers and small businesses above all else. That domestic strength plays a role.

There's still legal friction looming in Washington, though. A coalition of twenty-two Democratic state attorneys general has already challenged those proposed tariffs linked to forced labor investigations. That’s another layer of complexity thrown into the mix. It just keeps things messy.