What is holding up the US-India trade deal?

US Secretary of State Marco Rubio embarks on a second visit to India this year to strengthen ties despite ongoing disagreements over a trade agreement. Rubio will meet with high-ranking Indian officials, focusing on investment and energy during trips to Mumbai and Jamnagar, home to billionaire Mukesh Ambani's refinery complex. However, the main obstacle to the long-awaited trade deal remains unresolved.

Both nations have struggled to finalize the interim deal, with factors such as US President Donald Trump's tariffs, energy import disputes, and improved relations with India's rival Pakistan contributing to the delay. The legal uncertainty surrounding Trump's tariff plans, after court challenges invalidated the reciprocal tariffs, has further complicated the process.

India is also cautious about new US measures that could impact it, including an investigation into unfair trade practices and a law allowing up to 100 percent tariffs on Russian oil imports. Despite optimistic statements from both governments, recent comments from India's Finance Minister Nirmala Sitharaman and US Trade Representative Jamie Scott indicate that negotiations have stalled, with little room for further concessions.

The agriculture sector remains a contentious issue for India, while Washington seeks more US energy supplies. Despite a 21 percent increase in goods exports to the US in August, economists warn that reinstated tariffs would negatively impact India's growth outlook and weaken the already-weakening rupee.