After five rounds of trade negotiations, Indian officials were so confident of securing a favourable deal with the United States that they even signalled to the media that tariffs could be capped at 15%.
Indian officials expected U.S. President Donald Trump to announce the deal himself weeks before the August 1 deadline. The announcement never came.
Interviews with four Indian government officials and two U.S. government officials revealed previously undisclosed details of the proposed deal and an exclusive account of how negotiations collapsed despite technical agreements on most issues.
The officials on both sides said a mix of political misjudgment, missed signals and bitterness broke down the deal between the world’s biggest and fifth-largest economies, whose bilateral trade is worth over $190 billion.
The White House, the U.S. Trade Representative office, and India’s Prime Minister’s Office, along with the External Affairs and Commerce ministries, did not respond to emailed requests for comment.
India believed that after visits by Indian Trade Minister Piyush Goyal to Washington and U.S. Vice President J.D. Vance to Delhi, it had made a series of deal-clinching concessions.
New Delhi was offering zero tariffs on industrial goods that formed about 40% of U.S. exports to India, two Indian government officials told Reuters.
Despite domestic pressure, India would also gradually lower tariffs on U.S. cars and alcohol with quotas and accede to Washington’s main demand of higher energy and defence imports from the U.S., the officials said.
“Most differences were resolved after the fifth round in Washington, raising hopes of a breakthrough,” one of the officials said, adding negotiators believed the U.S. would accommodate India’s reluctance on duty-free farm imports and dairy products from the U.S.
U.S.’s top trading partners on Aug. 1, 2025.
COMMUNICATION BREAKDOWN
“At one point, both sides were very close to signing the deal,” said Mark Linscott, a former U.S. Trade Representative who now works for a lobby group that is close to the discussions between the two nations.
“The missing component was a direct line of communication between President Trump and Prime Minister Modi.”
A White House official strongly disputed this, noting other deals had been resolved without such intervention.
An Indian government official involved in the talks said Modi could not have called, fearing a one-sided conversation with Trump that could put him on the spot.
However, the other three Indian officials said Trump’s repeated remarks about mediating the India-Pakistan conflict further strained negotiations and contributed to Modi not making a final call.
“Trump’s remarks on Pakistan didn’t go down well,” one of them said. “Ideally, India should have acknowledged the U.S. role while making it clear the final call was ours.”
A senior Indian government official blamed the collapse on poor judgment, saying top Indian advisers mishandled the process.
“We lacked the diplomatic support needed after the U.S. struck better deals with Vietnam, Indonesia, Japan and the EU,” the official said.
“We’re now in a crisis that could have been avoided.”
Trump said on Tuesday he would increase the tariff on imports from India from the current rate of 25% “very substantially” over the next 24 hours and alleged that New Delhi’s purchases of Russian oil were “fuelling the war” in Ukraine.
