The India–US Trade Deal Is “90% Done”. So What’s the Hold-Up?

Updated: 3 October 2026

In late September 2026, a senior US official said a trade deal with India was “90-per cent-plus there”. India’s Commerce Minister Piyush Goyal called it “almost done and dusted”. Days later, the US Trade Representative said the talks were in the “short strokes”, while adding: “I don’t think there’s something imminent.”

So which is it, nearly finished or not finished at all? To understand why both can be true, we need to understand what’s actually being negotiated.

First, what is a tariff?

A tariff is a tax a country puts on goods coming in from another country. If the US puts a 20% tariff on a shirt made in India, an American shop importing that shirt pays an extra 20% of its value to the US government.

That matters because it changes prices. If Indian shirts face a higher tariff than shirts from Vietnam or Bangladesh, American buyers may switch to cheaper options, and Indian exporters lose orders. Tariffs can protect a country’s own industries, raise money or be used as bargaining chips. But they also make imported goods more expensive for ordinary people.

The United States is India’s largest export market, so the tariffs India faces there matter to factories, workers and farmers across the country.

How did we get here? A quick timeline

• August 2025: the US raised tariffs on many Indian goods to as high as 50%, including an extra penalty linked to India’s purchases of Russian oil.
• February 2026: India and the US announced an interim framework. The US would apply an 18% tariff on Indian goods; India would reduce or remove tariffs on many US industrial and some farm products, and said it intended to buy large amounts of US energy, aircraft and technology over five years.
• February 2026: the US Supreme Court ruled that the emergency-powers law used for many of these tariffs did not allow them. The US government replaced them with a temporary 10% tariff on imports from most countries, which itself faced legal challenges.
• July 2026: the US introduced new tariffs linked to investigations into forced labour in supply chains, covering 60 economies. India was placed in the lower tier, at 10%.
• September–October 2026: intense negotiations, ministerial meetings and a call between Prime Minister Modi and President Trump, described as “very constructive”.

If that sounds complicated, it is. That’s partly why the deal has taken so long: the ground keeps shifting under the negotiators’ feet.

The real sticking point: not just low, but lower

Here’s the most interesting part of the story. India isn’t only asking for a low tariff. It’s asking for a tariff lower than its competitors’.

In early September, Goyal said India would finalise the deal only when the US could give India “the preferential rate in comparison to our competition”. He specifically mentioned textile competitors like Bangladesh and Vietnam.

Why does this matter so much? Imagine two shops selling identical notebooks. If both get a 10% discount from the supplier, neither gains an edge. What matters is the difference. In global trade, an Indian garment exporter doesn’t just need a reasonable tariff; they need one that keeps their shirts competitive against a factory in Dhaka or Ho Chi Minh City.

Who gains, and who worries?

Like most trade deals, this one creates winners and people with real concerns.

Likely to benefit, according to analysts: labour-intensive export industries such as textiles, gems and jewellery, and pharmaceuticals, which employ millions of people and depend heavily on the US market.

Concerns raised: some analysts have warned that cheaper imports of certain US farm products could put pressure on Indian growers. Farming supports a large share of India’s population, which is why agriculture is often the most sensitive part of any trade negotiation India signs.

Governments negotiating trade deals are always balancing these interests: opening markets to help exporters, while protecting sectors that could be hurt by competition.

Why “90% done” can still take months

In trade talks, the easy parts usually get agreed first. What’s left at the end are the hardest items: the ones politically sensitive at home, or most valuable to the other side. The US Trade Representative said both sides had “identified the universe of items that are sticking points”. In other words, they know exactly what they disagree on. Agreeing on it is the hard part.

External Affairs Minister S. Jaishankar said in late September that “more or less an understanding” had been reached, while noting that one US tariff process was “still unfolding”.

India’s other big deal

The US talks aren’t India’s only trade story. In January 2026, India and the European Union announced a long-awaited free trade agreement. It still needs formal approval from both sides before it can take effect, which reports suggest could happen around early 2027. India is clearly trying to widen its options, so that no single market has too much power over its exporters.

What to watch next

• Whether the US agrees to a rate that gives India an edge over competitors.
• US Secretary of State Marco Rubio’s planned visit to India in October, and further Modi–Trump conversations.
• How US court cases over tariffs end, which could change the rules again.

Sources

• Business Today – “90 per cent plus there” (26 Sep 2026)
• The Tribune – Trade deal enters “short strokes” (2 Oct 2026)
• The Tribune – India to finalise only after preferential terms (Sep 2026)
• The Tribune – Jaishankar on the trade deal (29 Sep 2026)
• The White House – United States–India joint statement (Feb 2026)
• USTR – Section 301 forced-labour action (Jul 2026)
• Drishti IAS – India–US trade deal 2026
• Wikipedia – India–EU Free Trade Agreement