Synopsis
India is navigating complex trade negotiations with the United States, focusing on tariffs and energy imports. Though a trade deal is pending, India prioritizes solid assurances to protect its interests. Indian exports to the US have increased notably, contributing to a reduced trade deficit recently. Additionally, India seeks to maintain stable energy supplies amid fluctuating global oil dynamics.
India has to be both upfront and cautious with Donald Trump, who is armed with a new legislation to impose tariffs and penalties on countries with a high Russia trade folio. New Delhi, while firming up a trade deal, must not hurry its implementation steps.
It's one thing to close the agreement, which currently awaits legal clarity from Washington. Quite another to readily execute it. Essentially, the 'entry into force' clause holds the key. While Trump has signed a 'national interest waiver' to suspend implementation of the Lindsey O Graham Sanctioning Russia Act requiring imposition of 100% tariffs on top 5 Russian oil importers, including India, he has preserved leverage for future action.
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India will need more permanent protection and written assurances, which it's best positioned to negotiate now because the tides are currently in India's favour.
First, there's bilateral trade. Here, India should be in no hurry. With earlier tariffs suspended by the US Supreme Court, India's trade is operating on a relatively lower 10% tariff imposed through the Section 301 route, to which there's also a legal challenge against the Trump regime by US importers. That aside, the current rate is still lower than the 18% tariff slab envisaged for India in the trade deal.
Meanwhile, trade is performing well. Indian exports to the US have grown by over 11%, crossing $50 bn in April-September 2026, compared to the same period last year. This shows exporters are front-loading orders to make the most of the present 10% situation. Also, trade deficit has reduced by about $2 bn in the same period, indicating growth in US imports.
India is among few countries that have not paused but made progress in the trade deal conversation, despite the US Supreme Court order against Trump tariffs. India and Vietnam are the only two countries to have almost finalised a draft.
So, commercially and politically, India is on a better footing with the US, and doesn't need to be in a hurry to implement the trade deal until fully satisfied on all fronts.
Then there's Russian oil tariffs. In the fast-changing and fluctuating dynamics of oil trade, the shipping industry, along with trading arms of oil companies, seem to have found ways to get more cargo across the Strait of Hormuz in the past couple of months. For the first time since the US war on Iran, India has restored healthy access to Iraqi crude, which constitutes close to 20% of its diet, up from almost zero.
While the ways and means of how these ships are making their way across the strait remain hazy, shipping entities and oil trading firms are delivering to Indian shores with some added cost. But with the Dubai crude price index staying steady, the end result for Indian refineries is, for now, positive.
As for Russian oil imports, this is what India would call 'assured crude' supplies it needs to sustain for its energy security and overall stability of prices. Trump is using the same argument to justify the recent US diesel deal with Russia, though there are serious allegations of benefits to certain favoured business entities.
So, from an Indian standpoint, its ability as a large consumer to maintain 'price stability' and capacity as a major oil refiner provides strategic avenues for longer-term India-US collaboration, not sanctions, tariffs and penalties. India is better poised with the US to steer the conversation in this direction as a mutually beneficial objective.
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Finally, there's the two theatres of war. India's nudge to Russia to look at benefits of stopping the Ukraine conflict, and its strategic need to reduce dependence on China, have achieved some traction. Ukraine, too, has been making a closer evaluation of India's approach. More importantly, war fatigue has set in across the Western world. And that's why India works better as a facilitator than a target for the US.
In West Asia, Iran's focus has shifted more towards Saudi Arabia from the UAE as Houthis target Saudi pipelines and refineries. This has exposed the limits of the much-touted Pakistan-Turkiye-Saudi Arabia Mecca accord, which has so far failed to deliver much to Riyadh. Again, India is a better partner for the US in any reassessment of options for dialogue in this theatre, making it vital for New Delhi to hold its line while discussing ways to move forward. After all, like in all conflicts, economic compulsions do sink in.
More broadly, India and the US are at a point from where matters can politically be steered away from the aggressive tone of tariffs and trade leverages throughout Trump 2.0. Onus of the shift is squarely with the White House. It can look to defang the Graham Act by firming up specific assurances for India, or store it as a stick in its stack of leverages and alternatives to throw India off-balance when needed.
For India, unlike last year, the way things stand now is better than before. The time to hold ground is now - to negotiate from the present, not give it leeway, and not yield on an uneven playing field.
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