"Almost done and dusted" on September 24. A "plateau" by October 5, Eleven days changed everything.
NEW DELHI: Finance Minister Nirmala Sitharaman told the Munich Leaders Meeting in New Delhi on October 5, 2026 that India-US trade negotiations have reached a “plateau, beyond which giving or taking might be very, very difficult,” marking a sharp tonal shift from Commerce Minister Piyush Goyal’s assessment just eleven days earlier that the deal was “almost done and dusted.” The gap between those two statements captures a negotiation that has moved from executive optimism to acknowledged structural limits.
The shift became visible in a tight sequence of events. On September 30, Prime Minister Narendra Modi and President Donald Trump held a telephonic call reviewing trade, energy and defence ties. The next day, at the G20 Trade Ministers’ Meeting in Milwaukee, Goyal met US Trade Representative Jamieson Greer, who told reporters talks were in the “short strokes” but that a deal was “not imminent,” adding that negotiators had identified a “universe of items” still sticking. Four days later came Sitharaman’s plateau remark.
A Deal Built on Shaky Legal Ground
The negotiation’s current difficulty traces back to a courtroom in Washington. India and the US had agreed in February 2026 on an interim framework that would cut US reciprocal tariffs on Indian goods from 25% to 18%, part of a bilateral trade agreement process launched by Modi and Trump back in February 2025 with a target of $500 billion in two-way trade by 2030. However, weeks after that framework was announced, the US Supreme Court ruled in Learning Resources v. Trump that the executive branch could not impose or alter tariffs unilaterally under the International Emergency Economic Powers Act without explicit congressional authorisation. That ruling effectively stripped the White House of the legal mechanism it intended to use to grant India preferential tariff treatment outside a full, Congress-approved free trade agreement, leaving the concessions Washington had offered legally vulnerable.
This creates a genuine asymmetry at the negotiating table. Any tariff concession India makes through statutory notification is binding and permanent. Any tariff relief the US offers through executive action remains exposed to future judicial or legislative override, a structural imbalance Indian negotiators cannot simply negotiate around.
Where the Substantive Disagreements Sit
Beyond the legal mechanics, specific sectoral redlines remain unresolved. Washington wants duty-free access for genetically modified animal feed and dairy products, along with the removal of price caps on medical devices like coronary stents. India has resisted both, citing smallholder farmer livelihoods, cultural concerns around non-vegetarian animal feed certification, and public health mandates tied to affordable healthcare access. India, for its part, wants enforceable tariff parity with regional competitors like ASEAN nations, China and Bangladesh, which compete directly with Indian exporters in textiles, apparel and generic pharmaceuticals, a demand the US has yet to fully address given its own constrained legal authority post-ruling.
The Russian Oil Complication
Layered on top of this is the Lindsey O. Graham Sanctioning Russia and Iran Act, signed into law on September 18, 2026, which authorises secondary tariffs of up to 100% on countries ranking among the top five global importers of Russian crude or natural gas, a category that explicitly covers both India and China. The law includes a presidential waiver mechanism tied to demonstrated reductions in Russian energy imports, but the specific threshold required for that waiver remains undisclosed. Sitharaman addressed this directly in her October 5 remarks, noting pointedly that “there is no Lindsey Graham bill in Europe,” a comparison meant to underline that India’s parallel trade talks with European partners have not been conditioned on similar energy-related legislative mandates, reinforcing her broader argument that tariffs are increasingly being used as leverage rather than negotiated through standard give-and-take.
India Isn’t Waiting Around
Notably, India has not treated the US talks as its only option. The India-EU free trade agreement, concluded on January 27, 2026, is currently undergoing legal scrubbing ahead of formal signing and will eventually offer preferential access across 97% of EU tariff lines. Separately, the fifth round of India-Canada CEPA negotiations opened in Ottawa on October 5, aiming to roughly double or more bilateral trade by 2030, while talks with the Gulf Cooperation Council launched in February 2026. This multi-track approach gives Indian negotiators real leverage, reducing their exposure to pressure from any single market, including the US.
What Happens Next
Trade officials and analysts are watching a handful of concrete signals. A follow-up Modi-Trump call could potentially unlock movement on agricultural concessions or energy waiver terms, though this remains uncertain given how entrenched both sides’ positions appear. Equally significant will be whether the White House issues a formal waiver under the Graham Act citing measurable reductions in India’s Russian oil purchases, and whether negotiators eventually publish a joint interim term sheet with specific tariff lines, which would mark a genuine shift from political dialogue to enforceable commitment. Until one of these develops, the most likely near-term outcome is exactly what Sitharaman described: a prolonged standstill, with both countries maintaining current tariff baselines while India leans on its expanding web of alternative trade agreements to absorb the friction.
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