India-U.S. trade talks at a standstill; further concessions difficult

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India-U.S. trade talks stall

Highlights

According to Nirmala Sitharaman, India-U.S. trade talks have stalled at a 'plateau' due to disputes over balances, tariffs and concessions, making further progress difficult.
The India-EU agreement covers around one-quarter of global trade, with India opening 92.5 percent of tariff lines and the EU agreeing to open 99 percent.
India imports 80 percent of its fertilizer needs and sells it to farmers for Rs 300, while import costs are around Rs 3,000, increasing budget pressure.

This article was translated from the original. Read the original version by our correspondent here.

Roadblocks in trade talks and key points of agreement

According to Forbes India, Finance Minister Nirmala Sitharaman said on Monday during the Munich Security Conference in New Delhi that India-U.S. trade talks have reached a "plateau," after which further give-and-take could become "very, very difficult." She said negotiations are still ongoing, but have been tough and highly intensive and have yet to be finalized.

Sitharaman said the main obstacle is the trade balance structure, which favors India, while Washington wants to reduce its deficit and recoup what it sees as past losses. According to her, tariffs were previously a tool used within the negotiating framework, but are now being deployed as a broader means of pressure, making negotiations over concessions more complex for countries such as India.

She also commented on the relationship between multilateral and bilateral agreements, saying that neither is a substitute for the other. However, the weakening of institutions such as the WTO has shifted the focus toward bilateral agreements, as countries seek to advance their interests there on different terms.

Impact of the Europe deal, investment treaties and fertilizer costs

Presenting the India-EU agreement as a comparative model, Sitharaman said it covers around one-quarter of global GDP and trade. According to her, India has opened 92.5 percent of tariff lines, representing about 97 percent by value, while the EU has agreed to open around 99 percent by value; sensitive sectors such as dairy, soy and meat have also been handled carefully.

She said such an agreement could boost employment, as exports such as footwear, textiles, toys and processed components come from labor-intensive micro, small and medium enterprises, where large numbers of women are employed. On investment protection, she said a new investment protection template is in the final stage, replacing the 2016 bilateral investment treaty model, and is awaiting Cabinet approval. According to her, agreements with at least three more countries could be reached by December, while an agreement with Canada is possible by December or early next year; Russia is also among the countries in talks.

Sitharaman also highlighted pressure on food security from disruptions to fertilizer supplies. She said India imports around 80 percent of its fertilizer needs and sells a unit to farmers for about Rs 300, while import costs are around Rs 3,000. According to her, fertilizer prices have risen sharply since COVID, and shipping disruptions and higher insurance costs following the war in West Asia have forced India to create a dedicated shipping contingency fund; despite this, the country is advancing its climate goals through rooftop solar, solar pumps and legislation on modular nuclear reactors.

Rising global rates and the increasing cost of capital Our previous report noted that major central banks are exiting ultra-loose monetary policy, making funding more expensive and potentially prompting foreign investors to become more selective in markets such as India. We also explained that, amid pressure from the dollar and bond yields, India's ability to attract capital will increasingly depend on domestic economic fundamentals, real returns, external stability and policy credibility rather than global liquidity.

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