India delays US trade deal amid Trump administration's new manufacturing sector probe: Report

India has chosen to pause its pursuit of a comprehensive trade agreement with the United States, responding to a recent investigation initiated by the Trump administration, news agency Reuters reported on Friday. The probe, which targets what Washington calls "structural excess capacity and production in manufacturing sectors" among 16 countries including India, has led New Delhi to reconsider the pace of its negotiations.

Discussions, which appeared on track for an interim deal in March, have now encountered setbacks as officials weigh the implications of the new US inquiry and shifting tariff policies.

The momentum behind talks slowed significantly after a US Supreme Court decision in February struck down certain tariffs, prompting Washington to reassess its approach. According to Indian officials, the subsequent American investigation has complicated the environment for negotiations, especially as the US administration manages additional global pressures. One government source stated, "We are not in a hurry to sign any deal," describing the latest US action as a "pressure tactic to force countries into signing deals after the court order. It's a spanner in the works."

The trade discussions were initially anchored around a "framework for an interim agreement" outlined in a joint statement between New Delhi and Washington. Under this framework, India had anticipated a phased removal of tariffs and increased US exports, with Indian officials expecting further clarity regarding future duty rates. However, the recent developments have led New Delhi to adopt a more cautious stance, opting to "wait and watch" as the US recalibrates its trade policy and tariff structures.

Within the United States, expectations remain that India will adhere to its prior commitments. Sergio Gor, the US ambassador to New Delhi, commented, "So we fully expect the nations that we've made deals with to honour those deals," adding, "I think India will do that because ... it's not just about honouring it - it's a win-win situation." These statements reflect Washington's continued focus on securing cooperation from key trading partners under evolving regulatory and political circumstances.

Indian authorities are now seeking greater clarity on how the new investigation will affect tariff levels and overall trade flows. The recent probe, launched under Section 301 of the US Trade Act of 1974, has yet to yield definitive policy outcomes, prompting India to consider legal and diplomatic options, including potential recourse to the World Trade Organization. Meanwhile, India is consulting stakeholders and monitoring developments closely.

Analysts have supported New Delhi's cautious approach, stressing the importance of strategic patience given the current uncertainty. Priyanka Kishore of Asia Decoded remarked, "It makes sense for India to slow down on trade talks," and added, "If you are at 10% tariff and these investigations are going through, it is better to hold out and see what they come up with, rather than proactively sign an agreement."