NEW DELHI, March 13 - India has decided to postpone signing an interim trade agreement with the United States for several months, according to four Indian government sources briefed on the matter. The delay comes amid fresh investigations launched by the U.S. administration into what it describes as excess industrial capacity among multiple trading partners, a development the Indian sources said has injected new friction into talks that had shown early momentum.
The pause marks a reversal of expectations in New Delhi. Indian officials had anticipated concluding an interim pact in March and following with a fuller deal at a later date after an early February understanding in which President Donald Trump agreed to reduce punitive U.S. tariffs on Indian imports. That understanding included commitments from India to curb Russian oil imports, to lower duties on U.S. goods and to pledge purchases of $500 billion in American products. The Indian sources said the signing timeline is now likely to slip by several months.
The four sources, each either a government official with direct knowledge or someone briefed on the developments, asked not to be named because they were not authorised to speak with the media. India’s trade and foreign ministries did not respond to requests for comment, the sources said. A White House official told reporters the United States was continuing to work with India on finalising a deal.
According to the Indian sources, momentum in talks waned after the U.S. Supreme Court in late February struck down the tariffs the Trump administration had used. The sources added that there have been no substantive negotiations since that ruling, particularly as Washington has been occupied with the war on Iran.
Complicating the negotiating environment is a new U.S. investigation into what U.S. officials characterise as "structural excess capacity and production in manufacturing sectors" across 16 trading partners, a group that includes India. The probe has been launched under Section 301 of the U.S. Trade Act of 1974, the sources said. One of the Indian officials encapsulated New Delhi’s new posture: "We are not in a hurry to sign any deal."
That official added: "The new investigation is a pressure tactic to force countries into signing deals after the court order. It’s a spanner in the works." Reflecting that caution, the sources said India will largely adopt a "wait and watch" approach as U.S. tariff policy evolves, rather than rushing into an agreement while investigations and tariff settings remain uncertain.
The earlier understanding between New Delhi and Washington had been framed as a "framework for an interim agreement" under which India’s U.S. exports would face duties of 18%. The Supreme Court ruling prompted a shift in U.S. tariff policy: the punitive 25% tariff that had targeted Indian imports was dropped after the president said India had agreed to curb Russian crude imports. India, for its part, said it would diversify its supply base rather than fully halting purchases. Prior to these moves, the overall tariff on India had been 50%, one of the highest levels globally, the sources noted.
Following the Supreme Court decision, the U.S. administration imposed a 10% tariff on imports from all countries through July 24. New Delhi is now seeking clarity on whether Washington will revert to the earlier understood rate of 18% for Indian exports under the interim framework, or apply a different duty level, according to one source.
The Indian sources said New Delhi is also considering its formal options in response to the Section 301 probe. If permitted, India plans to present its case to the Office of the United States Trade Representative. Alternatively, the country will await any ruling and then consider steps such as approaching the World Trade Organization.
U.S. officials have signalled expectations that partner countries will uphold the commitments agreed in the early understanding. The U.S. ambassador to New Delhi, Sergio Gor, addressed the issue at a conclave organised by the India Today media group, saying the U.S. administration had multiple tools - including Section 301 - to impose tariffs. "So we fully expect the nations that we’ve made deals with to honour those deals," he said. "I think India will do that because ... it’s not just about honouring it - it’s a win-win situation."
On the energy front, U.S. officials have pressed India to increase its purchases of Russian oil to address a global energy crunch stemming from the conflict, the Indian sources said. The sources emphasised that India never completely halted its Russian oil purchases but rather slowed them, a distinction New Delhi has highlighted in discussions with Washington.
Outside observers quoted by the sources described New Delhi’s caution as a sensible response to an unsettled policy environment. "It makes sense for India to slow down on trade talks," said Priyanka Kishore of Singapore consultancy Asia Decoded. "If you are at 10% tariff and these investigations are going through, it is better to hold out and see what they come up with, rather than proactively sign an agreement."
For now, the immediate future of an interim India-U.S. trade agreement is uncertain. New Delhi’s posture appears to be to watch how the U.S. administration resolves the Section 301 probe and finalises its tariff posture before committing to a formal signature, and officials in both capitals continue to signal they are engaged in discussions even as substantive negotiations remain on hold.
Summary: India will delay signing an interim trade agreement with the United States for several months after new U.S. investigations into alleged excess manufacturing capacity among trading partners and recent changes to U.S. tariff policy undermined an earlier schedule. New Delhi had expected a March signing following an early February understanding but has adopted a cautious stance as Section 301 proceedings and tariff levels remain unsettled.