The Indian Ministry of Commerce and Industry said on Tuesday trade discussions with a U.S. delegation to New Delhi were “positive” and “forward-looking.”
“Acknowledging the enduring importance of bilateral trade between India and the U.S., the discussions were positive and forward looking covering various aspects of the trade deal. It was decided to intensify efforts to achieve early conclusion of a mutually beneficial Trade Agreement,” the Indian Commerce Ministry said.
The U.S. Embassy to India also described the meeting as “positive” and said it cleared the way for the “next steps in bilateral trade negotiations.”
A sixth round of bilateral talks could be coming soon, although neither U.S. or Indian officials were willing to set a date. The sixth round of talks was originally scheduled for August, but was postponed amid rising tensions after President Donald Trump imposed a 25 percent punitive tariff against India for purchasing Russian oil, on top of the 25 percent general tariff he ordered earlier.
“This is not an official round of negotiations but it will definitely be a discussion on the trade talks and on trying to see how we can reach an agreement between India and the U.S.,” India’s chief negotiator Rajesh Agrawal said on Monday.
The U.S. delegation was headed by Brendan Lynch, the Assistant U.S. Trade Representative for South and Central Asia. Lynch, who has a background in agriculture, manufacturing, and intellectual property rights, has taken point on bilateral trade negotiations with India. One of his previous positions was director of India affairs for the U.S. Trade Representative (USTR).
President Trump’s nominee for ambassador to India, Sergio Gor, said during his confirmation hearings last week that America and India “are not that far apart right now on the deal.”
“In fact, they’re negotiating the nitty-gritty of the deal,” he said.
There is plenty of both nitty and gritty to discuss. The two biggest sticking points to a trade deal are India’s insistence on buying huge amounts of discounted Russian oil, putting billions of dollars into Russian President Vladimir Putin’s war chest, and India’s refusal to relax protectionist policies for its agriculture industry.
India shows little sign of yielding on either point, although President Trump has lately been singing New Delhi’s tune by criticizing Europe for buying Russian energy products. India has long argued that singling out its Russian imports is unfair and hypocritical if the Europeans are doing business with Russia too.
The European Union responded to Trump’s criticism by promising to look into “phasing out Russian fossil fuels faster,” as European Commission President Ursula von der Leyen put it. It is not yet clear if these promises will mollify India and persuade it to cut back on its own Russian oil imports.
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Russia’s oil discounts have grown considerably smaller this year, so the cost of finding other suppliers would be much lower for India, which imported almost zero Russian oil before the invasion of Ukraine in 2022. India actually sent Russia a not-so-subtle message last week that it had better increase those discounts, if it wants to keep India’s business at current volumes.
The agriculture issue will be a much tougher nut to crack, as Prime Minister Narendra Modi has vowed to continue protecting the massive Indian agriculture industry for foreign competition at all costs. Modi and his BJP Party can make a reasonable case that they would not politically survive capitulating to U.S. demands for greater market access.
Indian Commerce Minister Piyush Goyal, the most consistently upbeat member of Modi’s government when it comes to trade issues, said on Wednesday that India’s relationship with the United States remains strong, Modi is still close friends with Trump, and trade issues will be resolved soon.
“We have been holding discussions for the last few months. Yesterday, a U.S. representative was here. Talks are going on. President Donald Trump also wished Modi on his birthday. India and the U.S. are friendly countries; our leaders are friends. Every situation will be addressed satisfactorily,” Goyal, referring to Lynch’s visit to New Delhi.
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