India will hold off on signing a trade deal with the United States for several months, four Indian sources said, as fresh investigations by President Donald Trump’s administration into what it calls excess industrial capacity among trading partners add new friction after an early understanding, opens new tab last month, Reuters reported.
New Delhi had initially expected to sign an interim deal in March, followed by a full deal later, after Trump agreed in early February to cut punishing U.S. tariffs on Indian imports in return for commitments including halting Russian oil imports, lowering duties on U.S. goods and pledging to buy $500 billion worth of American products.
That timeline could now slip by several months, the sources said, although U.S. officials say they expect India to honour its commitments. The Indian sources, all government officials with direct knowledge of the matter or briefed on it, declined to be named because they were not authorised to speak to media.
A spokesperson from India's trade ministry denied any hold off in bilateral engagement. "It is reiterated that the two sides remain engaged for a mutually beneficial trade agreement," the spokesperson added, without offering details on formal signing of the deal.
A White House official said the U.S. was continuing to work with India on finalising a deal.
Negotiations lost momentum after the U.S. Supreme Court in late February struck down Trump’s tariffs, the Indian government sources said, adding that there have been no substantive talks since, particularly as Washington has been preoccupied with the war on Iran. India never halted Russian oil purchases, only slowed them, and U.S. officials are now urging New Delhi to increase buying to help ease a global energy crunch triggered by the conflict.
Complicating matters is a new U.S. investigation into what it calls “structural excess capacity and production in manufacturing sectors” in 16 trading partners, including India.
"We are not in a hurry to sign any deal," said one of the sources. "The new investigation is a pressure tactic to force countries into signing deals after the court order. It's a spanner in the works."
India would instead largely take a “wait and watch” approach as U.S. tariff policy evolves, the source said, noting that Trump dropped a 25% punitive tariff on India after saying New Delhi had agreed to curb Russian crude imports, while India only said it would diversify its supply base. The overall tariff on India was 50% earlier, among the highest in the world.
The latest probe has been launched under Section 301 of the U.S. Trade Act of 1974. India plans to present its case to the Office of the United States Trade Representative if permitted, or await a ruling before considering options such as approaching the World Trade Organization, the source said.
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