India-US bilateral talks underway amid expectations of making headway on the deal

With Commerce and Industry Minister Piyush Goyal and a team of senior officials in the US, discussions between the two countries are underway with expectations that it would yield the way forward and help clinch a trade deal.
 
While the government has refrained from any comment on the ongoing visit, sources have indicated that multiple discussions are underway on a host of issues in a bid to take forward the stalled negotiations. 
 
The commerce minister, along with senior officials, including special secretary and chief negotiator Rajesh Agrawal, is in the US this week, and the delegation is expected to return later in the week.

Goyal’s visit to the US comes soon after US trade negotiator Brendan Lynch, who is the Assistant US Trade Representative for South and Central Asia visited New Delhi and held day long discussions with Agrawal on September 16.
 
A key sticking point continues to be the penalty of the additional 25% tariff on Indian exports, which India hopes will be withdrawn by the US. It is also hoped that the trade deal would soften the tariff on India and lower it from the existing 25%.
 
India has also remained firm on its stance that it would not open up sensitive sectors of agriculture and dairy and GM feed, while the new US policy on H1B visas is being seen as another complication in bilateral relations.
 
Indian exports are bearing the brunt of the high tariffs. As per a recent GTRI report, India’s US exports plunged 22.2% between May and August 2025, falling from $ 8.8 billion to $ 6.9 billion as tariffs climbed from 10% to 50%.
 
“September will be the first full month where all Category C exports face 50% tariffs, meaning the declines in textiles, gems and jewellery, shrimp, chemicals, and solar panels could deepen further,” it further noted.

Analysts have also warned about the impact of the tariffs on the economy. “While India’s direct goods export exposure to the US is modest at about 2% of GDP, higher tariffs could erode
competitiveness and amplify indirect growth impact,” said a report by CareEdge Ratings.
 
If 50% US tariffs persist, they could pull India’s FY26 GDP growth down to around 6%, the agency further noted. “We remain cautiously optimistic about a resolution in the coming months that could bring India’s tariffs closer to its peers, eventually easing rupee pressures,” it said.
 
India Ratings has also said it expects the current account deficit to increase in the second quarter of the fiscal due to the US tariff woes to an estimated $ 10 billion (1% of GDP), which would be a three-quarter high. The current account deficit was at $ 2.4 billion (0.2% of GDP) in the first quarter of the fiscal.
 
India Ratings expects the merchandise exports to moderate to a three-quarter low of around $ 110 billion in the second quarter of the fiscal. Merchandise imports, however, are expected to increase to around $ 189 billion in 2QFY26, due to a steady domestic demand.