Talks for a trade deal with the United States could resume only after the matter of the additional 25 per cent petroleum tax is settled, Indian Express reported quoting a senior Commerce and Industry Ministry official.
A US delegation was due to arrive in New Delhi on August 25 to continue negotiations. But the talks were "halted" after President Donald Trump raised India's Russian oil import as a main impediment. On August 6, Trump declared an additional 25 per cent tariff, over and above the current two-way duty of 25 per cent.
Consequently, U.S. duties on Indian exports are now 50 per cent, a policy that was implemented on Wednesday.
The official went on to clarify that interaction between the two sides remains ongoing, underlining that only the August 25 round of talks has been rescheduled.
“We may not be negotiating the trade deal right now but the engagement is still going on. Negotiating the agreement would entail that the additional 25 per cent will have to be first addressed. Because if we do a trade deal and the additional tariffs are still there, it will not make sense for our exporters,” the official said.
It is understood that trade matters were also discussed during the virtual dialogue of U.S.-India 2+2 Intersessional Dialogue that took place earlier this week. On August 26, the dialogue was co-chaired by Bethany P. Morrison, Senior Bureau Official, Bureau of South and Central Asian Affairs, Jedidah P. Royal, Acting Assistant Secretary of Defense for Indo-Pacific Security Affairs, and India's Additional Secretary of the Ministry of External Affairs Nagaraj Naidu Kakanur, and Singh, Joint Secretary, Ministry of Defence.
With new tariffs in effect, which are already affecting Indian exporters, the Commerce and Industry Ministry is exploring possible measures to mitigate the short-term liquidity problem in industry's liquidity, ministry officials said. In 2024–25, India exported $87 billion worth of goods to United States, and the Finance Ministry estimates that 55 per cent of those shipments will be impacted by the increased tariffs.
“The industry expects their orders from the US to slow down now, and this will result in a liquidity crunch. There are several companies that I know of that are completely dependent on the US market and there will be challenges in the textile, chemicals and other sectors. The industry has sought measures similar to those announced during the Covid-19 period. The government is seized of the issue and there is very positive work going on. The issue of liquidity and how to address it is on the agenda,” the Commerce and Industry Ministry official said.
The official explained that the government is evaluating measures that “enable the industry to carry out operations” but “not in the form of subsidy.” “A relief package can be announced but the government is aiming to do something for the long-term benefit. We can announce a package but if the offtake is not good it will not take off. So the measures are being carefully looked at,” the official said.
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