India and US Negotiate Trade Deal Amid Overcapacity Probes

The Government of India and the United States are negotiating a bilateral trade agreement (BTA) to reduce tariffs and increase market access. In February 2026, both nations established a framework for an interim agreement, with the US proposing to lower tariffs on Indian goods to 18 percent. However, a planned March signing was delayed after the Supreme Court of the United States ruled that President Donald Trump's reciprocal tariff policies under the International Emergency Economic Powers Act were unconstitutional, forcing the US to develop a new tariff architecture.

Diplomatic efforts intensified in April 2026, with Indian Ambassador Vinay Mohan Kwatra hosting US Trade Representative Jamieson Greer and former National Security Adviser Robert O'Brien in Washington. A technical team from India's Ministry of Commerce and Industry, led by Chief negotiator Darpan Jain, visited Washington on April 20 to finalize a legal agreement based on a February 7 joint statement.

Despite these efforts, a final deal remains unlikely until the United States Trade Representative completes Section 301 investigations into India's alleged structural excess capacity in solar modules, petrochemicals, and steel, as well as accusations of forced labor. Washington has specifically highlighted a $58 billion trade surplus in India's favor. India has denied these claims, arguing that the US has not identified specific violating policies.

Parallel to these disputes, investment ties continue to grow. In May 2026, US Ambassador Sergio Gor announced that Indian companies plan to invest over $20.5 billion in the US across technology and pharmaceuticals to strengthen supply chains and create American jobs.