India-US trade talks at a 'plateau', says Finance Minister

The brief in 4 cards

1. Context1 / 4
   • Speaking at a Munich Security Conference event in New Delhi on 5 October 2026, Finance Minister Nirmala Sitharaman said both sides have reached "a plateau beyond which giving or taking might be very very difficult".
   • She said the trade balance is in India's favour, so the US naturally wants to reduce its deficit. Negotiations, she said, are still going on.
   • She criticised the "weaponising" of tariffs, saying their use has moved beyond that of a bargaining instrument.
   • Her remarks came days after the US Trade Representative said on 1 October that a deal was "not imminent", and during the Commerce Minister's visit to the US from 29 September to 5 October.
2. Key highlights2 / 4

   The table below shows the main steps. Tariff rates have changed repeatedly, so the dates matter.

   Date	Development
   February 2025	Negotiations on a Bilateral Trade Agreement (BTA) begin
   August 2025	US tariffs on Indian goods reach 50%, including an extra 25% linked to India's purchases of Russian oil
   2 to 9 February 2026	A Framework for an Interim Agreement is announced. The extra 25% duty is removed from 7 February, after India commits to stop buying Russian oil. The US says the reciprocal tariff will fall from 25% to 18%
   Late February 2026	A US Supreme Court ruling is reported to have struck down the earlier tariffs, after which a temporary 10% tariff applied
   1 to 5 October 2026	The US says a deal is not imminent; the Finance Minister says talks have plateaued

   • What India offered in the framework. To remove or reduce tariffs on US industrial goods and many farm goods, and to deal with non-tariff barriers.
   • What remains hard. Agriculture and dairy for India; US sectoral tariffs on steel, aluminium and automobiles for the US; and rules on digital trade.
   • On Russian oil. The US tied removal of the extra tariff to India's commitment to stop buying Russian oil. Separately, Sitharaman stressed strategic autonomy on energy purchases in the context of India's trade talks with Europe.
3. Key concepts3 / 4

   1. What is a trade imbalance?

   A persistent gap between what two countries export to and import from each other. India sells more goods to the US than it buys, so the US runs a goods trade deficit with India. A deficit is not a loss in itself, since both sides gain from the goods exchanged, but it is often treated politically as one.

   2. What does "weaponisation" of tariffs mean?

   Using import duties not mainly to raise revenue or to protect an industry, but to put pressure on another country over unrelated matters, such as its energy purchases or its foreign policy. It is like a shopkeeper raising one customer's prices to change where that customer buys something else.

   3. What is the MFN principle?

   Under World Trade Organization rules, a country should give every member the same tariff treatment it gives its "most favoured" partner. Country-specific penalty tariffs sit uneasily with this principle, which is the tension Sitharaman pointed to.

   4. What is an interim agreement?

   A partial deal that settles some issues early, such as tariff cuts on selected goods, while a fuller agreement is still being negotiated. It locks in some gains, but can leave the hardest issues unresolved.

4. Way forward4 / 4

   These are suggested measures, not approved policy.

   • Seek a balanced and predictable deal that gives both sides durable market access, rather than rates that change with each announcement.
   • Protect sensitive sectors such as agriculture and dairy, where livelihoods are concentrated.
   • Diversify export markets, building on the India-EU agreement and others, to reduce exposure to any single partner's tariff decisions.
   • Keep energy choices strategic, balancing price, security of supply and relations with partners.
   • Use rules-based channels where tariffs are used coercively, while continuing to negotiate.

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