India Dithering on Signing the Trade Deal with the US is a Welcome Development
Authors
In February 2026, the US Supreme Court had outlawed the imposition of International Emergency Economic Powers Act (IEEPA), 1977 tariffs by the US President. This milestone judgement ended the almost daily specter of Trump threatening tariffs on partners and foes alike through Truth Social posts. The judgement also took away the basis of multiple trade deals (or framework agreements) that the US had signed with multiple countries, including India.
Following the ruling, and after going through publicly available information released by the US and Indian sides on the India-US framework agreement, I had written an op-ed for Moneycontrol arguing that India should re-negotiate certain aspects of the agreement. In particular, I highlighted three aspects that needed re-visitation: questions of Russian oil, clarity on US agricultural exports, and finally, variance on digital trade.
My argument was based on the following provision of the India-US joint statement:
In the event of any changes to the agreed upon tariffs of either country, the United States and India agree that the other country may modify its commitments.
It seems that India is dithering on taking the framework agreement to its conclusion (that is, signing the final deal).
Below is an excerpt from an Indian Express report quoting an unnamed senior government official:
The US deal was to be signed in March. When we had said this, the Supreme Court judgment on IEEPA tariffs had not come. Now with the Supreme Court order, the [reciprocal tariffs] per se do not exist. Now, we have [US] tariffs under the balance of payments (BoP) under Section 122, which have been in place for five months. So any deal that we sign has to be around a tariff structure or comparative advantage that India gets in the US market. The US is working on trying to recreate a tariff architecture. When they can create the pathway, that juncture will be right to sign a deal.
There are too many variables at play currently for India to agree to any trade deal with the US. Post IEEPA ruling, Trump has placed uniform 15 per cent tariffs using the Section 122 of the Trade Act of 1974 for a duration of 150 days. It is unclear whether these tariffs would be extended (with or without the US Congress approval). In any case, though, the comparative advantage angle (with countries out competing each other on getting the most favourable tariff treatment from the US) has evaporated to some extent. To further add to the complications, the US is also investigating India among a host of other countries for “structural excess capacity and production in manufacturing sectors” by using section 301 of the Trade Act of 1974.
Given the uncertainties involved and the legal basis for the reciprocal tariffs ruled out, I think India delaying the final deal is a welcome development. I would further make a case for India dithering any deal signing till the results of the mid-term elections are out. Here’s the ending paragraph from my Moneycontrol op-ed:
But given the altered domestic legal reality in the US, it would not be an unfathomable idea for the Indian side to dither on agreeing to a final, comprehensive trade deal until the conclusion of the mid-term elections later this year. An unfavourable mid-term result may strengthen the US Congress’ exercise of powers over taxation and tariffs, likely leading to a reduction of Trump’s leverage in negotiations with India.