India and the US are holding a day of trade talks, sparking hope that stalled negotiations on a bilateral agreement will soon resume.
A team led by US trade negotiator Brendan Lynch is in Delhi to meet officials from India’s commerce ministry.
India said the meeting doesn’t mark the start of the next round of negotiations, describing it as a “discussion” about “trying to see” how an agreement can be reached.
Negotiations on a trade deal had stalled after US President Donald Trump imposed a hefty 50% tariff on Indian goods, partly as a penalty for Delhi’s purchase of Russian oil and weapons. India has defended its decision, citing domestic energy needs, and called the tariffs “unfair”.
The hefty duties, along with strong criticism of India by Trump and his key officials, have led to a swift and surprising deterioration in ties between the allies.
India is a major exporter of goods, including garments, shrimp and gems and jewellery to the US, and the tariffs have already impacted production and livelihoods.
So Tuesday’s meeting between Indian and US officials is being closely watched.
“This is not an official round of negotiations but it will definitely be a discussion on the trade talks and on trying to see how we can reach an agreement between India and the US,” Rajesh Agrawal, who is leading the discussions on India’s behalf, told local media on Monday ahead of Mr Lynch’s visit.
A round of negotiations was called off last month following Trump’s tariff announcement and India’s refusal to stop buying Russian oil.
But over the past few days, hopes have risen – Trump administration officials have sounded more conciliatory and India has confirmed that the discussions are still on.
On Monday, US trade adviser Peter Navarro told CNBC News: “India is coming to the table. We will see how this works.”
Navarro has been one of the most vocal critics of India, calling Russia’s ongoing war with Ukraine Indian Prime Minister Narendra “Modi’s war”.
In the CNBC interview, Mr Navarro also referenced last week’s social media exchange between Trump and Modi.
Trump said that the US and India were “continuing negotiations to address the trade barriers” between the two countries. In response, Modi echoed the US president’s optimism and said the two countries were “close friends and natural partners.”
Sergio Gor, Trump’s nominee to be the next US ambassador to India, also said that the trade deal “will get resolved in the next weeks”.
“We are not that far apart right now on the deal. In fact, they’re negotiating the nitty-gritty of the deal,” he said during a confirmation hearing last week.
But it still remains to be seen how the countries solve key disagreements that had earlier prevented a trade deal from materialising.
Agriculture and dairy, in particular, are key sticking points.
For years, Washington has pushed for greater access to India’s farm sector, seeing it as a major untapped market. But India has fiercely protected it, citing food security, livelihoods and the interests of millions of small farmers.
Last week, US Commerce Secretary Howard Lutnick repeated his earlier criticism of India’s fierce safeguards, asking why a country of 1.4 billion people wouldn’t “buy one bushel of US corn”.
But Indian experts have argued that Delhi shouldn’t give in to pressure to open up its agricultural market, keeping national sovereignty and food security in mind.
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