Trade negotiations between India and the United States have hit a fresh roadblock after a senior aide to former US President Donald Trump claimed that a nearly finalised bilateral deal fell through due to a lack of direct communication between the two leaders.
US Commerce Secretary Howard Lutnick said that negotiations were largely complete but required a final phone call from Prime Minister Narendra Modi to President Donald Trump. According to Lutnick, that call never happened, leading to the deal being shelved.
Speaking on a podcast with entrepreneur Chamath Palihapitiya, Lutnick stated, “It was all set up, but I said I needed Modi to call the President. They were uncomfortable doing it, so Modi didn’t call.” He added that while India and the US were very close to finalising the agreement, New Delhi ended up being “on the wrong side of the see-saw.”
Lutnick also revealed that the US successfully concluded trade agreements with countries such as Indonesia, Vietnam, and the Philippines soon after. He noted that India’s deal was expected to be completed even earlier than those, and at what he described as a “higher negotiated rate.”
The remarks come amid heightened trade tensions, with Donald Trump recently suggesting that tariffs on Indian goods could be increased if New Delhi did not cooperate with Washington on the issue of Russian oil imports. Trump stated that India was keen to maintain good relations but warned that tariffs could be raised “very quickly” if the US remained dissatisfied.
50% Tariffs and India’s Firm Stand
The United States imposed 50% tariffs on certain Indian goods in August last year, citing India’s continued energy trade with Russia. Washington has since attempted to use the tariffs as leverage to push India to scale back its purchases of Russian oil.
India, however, has consistently maintained that its energy procurement decisions are guided by market conditions and the needs of its citizens. Union Commerce Minister Piyush Goyal previously clarified that India would not negotiate trade agreements under pressure or artificial deadlines.
“We are open to discussions, but we do not do deals in a hurry or with a gun to our head,” Goyal had said, reinforcing India’s position of strategic autonomy in trade negotiations.
Risk of Steeper Tariffs Ahead
Concerns have grown further following comments by US Senator Lindsey Graham, who claimed that Trump has approved a proposed Russia sanctions bill. The legislation, titled the Sanctioning Russia Act of 2025, mandates tariffs of at least 500% on goods and services imported from countries that continue to trade in Russian-origin uranium and petroleum products.
If passed, the bill could significantly impact India-US trade relations by placing India among several nations facing steep penalties for maintaining economic ties with Moscow. The proposed measures aim to intensify pressure on Russia to halt its military operations in Ukraine by targeting its global trade partners.
As discussions continue, the future of the India-US trade deal remains uncertain, with diplomatic engagement and geopolitical considerations likely to play a decisive role.
