Stuck at the Table: India–U.S. Trade Talks Lose Momentum Amid Growing Gaps
July 1, 2025 — Washington & New Delhi — A trade deal that once symbolized a new era of cooperation between the world’s largest democracies is now in danger of slipping away. The proposed India–U.S. trade agreement—branded by leaders as “historic,” “transformative,” and “beautiful”—has been delayed again, and insiders say a final agreement is unlikely in 2025.
Negotiations, which started with high hopes in early 2024, have bogged down over familiar friction points. Sources close to the talks describe the environment as “tense” and “deeply political.”
Three Core Fault Lines
1. Agriculture: The U.S. wants expanded access to India’s market for American-grown dairy, poultry, and GM crops. India’s negotiators are under pressure from domestic farming lobbies and fear unrest in rural areas already grappling with inflation and climate stress.
2. Pharmaceuticals and IP: Washington demands stronger patent protections for American drugmakers and the elimination of price caps on medical devices. India has pushed back, citing its role as the “pharmacy of the Global South.”
3. Digital Trade: Disagreement over cross-border data flows, cloud regulation, and digital tax rules has led to deadlock. The U.S. wants free movement of data and minimal regulation; India insists on “data for development” and sovereign control over digital infrastructure.
Diplomatic Optimism Fading
Official statements remain upbeat, with both sides claiming “constructive dialogue.” But privately, negotiators acknowledge that little progress has been made on the thorniest issues.
“There’s a growing realization that this may not be the time to finalize a comprehensive deal,” said a U.S. trade analyst. “The two governments are simply too far apart on fundamental trade philosophy.”
Political Constraints on Both Sides
Both nations are facing political headwinds. Prime Minister Modi, newly re-elected in 2024, is facing criticism over rising unemployment and economic inequality. The Biden administration, meanwhile, is dealing with a narrow majority in Congress and growing pressure to protect American jobs ahead of the 2026 midterms.
Neither leader appears eager to make politically risky concessions.
Business Frustration Mounts
India’s exporters want greater access to the U.S. for textiles, generic drugs, and IT services. American businesses seek lower tariffs, easier compliance norms, and better protection for innovations.
“Without tangible improvements, investor confidence will take a hit,” warned the head of an Indo-U.S. business council. “We can’t keep relying on goodwill and military partnerships alone.”
Conclusion
While both governments are keen to present a united front geopolitically, their economic priorities diverge. As 2025 enters its second half, the once-ambitious trade deal now looks like another case of overpromising and underdelivering.
Unless negotiators find a creative breakthrough, the “big, beautiful” India–U.S. trade deal may join the long list of stalled initiatives that began with vision but ended with vague statements and photo ops.
