By Sanskriti Global Exports by Himanshu Gupta

Navigating the Storm: Why the Stalled US-India Trade Deal Demands Your Immediate Attention

November 29, 2025 – As we head into the final month of the year, a palpable sense of unease is cutting through the usual optimism in India's trade corridors. While domestic demand indicators remain robust, a significant international headwind is threatening to complicate our economic trajectory. A recent, sobering report from Bloomberg has confirmed what many of us in the industry have feared: the much-anticipated, comprehensive trade deal between India and the United States is not just delayed, but is facing fundamental roadblocks that could have cascading effects on Indian businesses.

For the Indian import-export professional, this is not a distant diplomatic headline; it is a clear and present operational challenge. The spectre of escalating tariffs, supply chain disruptions, and market access uncertainty is no longer a theoretical risk. It is a reality that demands strategic recalibration. This article will dissect the situation, drawing from the latest analysis, and provide a clear-eyed view of the implications for your business and the proactive steps you must consider today.

The Broader Economic Picture: A Summary of the Sticking Points

The Bloomberg article, titled “India's Economy Growth Outlook Complicated by US Trade Deal Woes,” paints a picture of negotiations mired in long-standing, complex issues. While hopes were high earlier this year for a breakthrough, negotiators on both sides appear to be at an impasse over several key areas. These include:

• Market Access: The US continues to push for lower tariffs and greater access for its agricultural and dairy products, a politically sensitive issue in India. Conversely, Indian negotiators are seeking better access for certain textile, engineering, and pharmaceutical goods.
• Digital Trade & IPR: Disagreements over India's digital services tax, data localisation norms, and the broader framework for Intellectual Property Rights (IPR) protection, particularly for pharmaceuticals and technology, remain a significant hurdle.
• Non-Tariff Barriers: Indian exporters frequently report challenges with what they perceive as stringent and often arbitrary US regulatory standards and certification processes, which act as non-tariff barriers to trade.

The report quotes Dr. Anirudh Nim, a leading trade economist, who warns, “We must not underplay the risks from tariffs which has begun to show up and can worsen if a trade deal isn't arrived at in near future.” This sentiment captures the core of the problem. The initial, retaliatory tariffs imposed over the past few years were seen by many as a negotiating tactic. Now, however, their impact is crystallizing into tangible economic friction. Businesses that had absorbed these costs are now seeing them erode margins, while the uncertainty is stalling investment and expansion plans. The risk is that this stalemate could lead not just to the continuation of existing tariffs, but a new round of retaliatory measures if frustrations boil over.

Implications for Indian Import-Export Professionals

For businesses on the front lines of global trade, the macroeconomic analysis translates into specific, daily challenges. The failure to secure a trade deal creates both direct and indirect pressures that must be managed proactively. Here are the key implications:

• Increased Landed Costs and Margin Squeeze: For importers sourcing machinery, high-tech components, specific chemicals, or premium raw materials from the US, existing tariffs directly inflate the landed cost. Without a deal to roll these back, these costs become a permanent feature of business operations, squeezing profit margins or forcing price increases that can reduce competitiveness in the domestic market.
• Eroding Competitiveness of Indian Exports: Indian goods subject to US tariffs—ranging from steel and aluminum products to certain categories of textiles and auto components—are more expensive for American buyers. In a competitive global market, this price disadvantage can lead US importers to seek alternatives from countries like Vietnam, Mexico, or other ASEAN nations that may have more favourable trade terms.
• Critical Supply Chain Volatility: The uncertainty is perhaps more damaging than the tariffs themselves. For manufacturers in sectors like electronics, automotive, and capital goods who rely on a steady flow of specialized US components, the risk of new tariffs or export controls creates immense volatility. This forces a difficult choice: either hold expensive buffer inventory or invest heavily in qualifying and sourcing from alternate, non-US suppliers—a costly and time-consuming process.
• Sector-Specific Vulnerabilities: Certain sectors are more exposed than others. The pharmaceutical industry, while a major exporter, faces constant pressure on IPR issues. The burgeoning digital services and IT sector is directly in the line of fire over data and tax policies. Furthermore, our agricultural exporters, hoping for greater access for products like mangoes, grapes, and spices, will see those ambitions put on hold.
• Logistical and Compliance Overhead: A state of unresolved trade friction invariably means more scrutiny at customs, more complex paperwork, and a higher risk of disputes over classification and valuation. This increases the administrative burden and operational costs for both importers and exporters, diverting resources away from core business activities.

Conclusion: The Strategic Imperative is Diversification and Agility

The allure of the American market is undeniable, and it will and should remain a key focus for Indian trade. However, the current stalemate is a stark reminder of the risks of over-reliance on any single trade partner, no matter how large. The era of passively waiting for a favourable trade deal to materialize is over. The new imperative is proactive, strategic risk management.

Indian import-export leaders must now actively pursue a 'US+1' strategy. This means aggressively exploring and developing alternative markets. For exporters, this could be a renewed focus on the European Union, the Middle East, or the rapidly growing economies within the RCEP bloc. For importers, it means building robust, resilient supply chains with qualified suppliers from multiple geographies to mitigate the risk of disruption from US-centric trade spats.

Internally, businesses must engage in rigorous scenario planning. Model the impact of a 5%, 10%, or even 20% increase in tariffs on your key product lines. Review your contracts with US partners—who bears the liability for new tariffs? Can you renegotiate terms? The path ahead requires agility, foresight, and a diversification of both markets and supply sources. While we all hope for a diplomatic breakthrough, prudent business strategy demands that we prepare for a prolonged period of uncertainty.

Source: Original