U.S.-India trade talks revamp as Trump sees other deals being done

A renewed push to conclude a U.S.-India trade deal may get underway, analysts say, as the White House sees other countries and power blocs working harder than ever to remove barriers to trade and tariffs.

The urgency and impetus to get talks over the line could come after the EU and India signed off on a long-awaited trade deal on Tuesday, with the agreement seeing both sides phase out tariffs on the vast majority of each other’s imports.

“The EU–India deal could … light a fire under efforts to conclude a U.S.–India trade deal and help to move negotiations forward on a comprehensive bilateral trade agreement,” Mark Linscott, nonresident senior fellow on India at the Atlantic Council, commented Tuesday.

Trump has yet to react to the EU-India deal, which was two decades in the making, but Washington could view bilateral trade agreements between other powerful nations with concern and as a potential threat.

The U.S. already has a trade deal with the EU (which has maintained 15% tariffs on EU exports to the States) but when it comes to the U.S.’ own stalled trade talks with India — a country it imposed a 50% tariff on — it certainly leaves negotiations in more uncertain territory.

But according to Atlantic Council expert Linscott there is no need for a U.S.-India deal to be derailed. “While the agreement may be interpreted as a response to the Trump administration’s tariffs and tariff threats, there is no reason it should undermine the U.S. trade relationships with either the EU or India,” he said.

India’s oil and gas minister told CNBC on Tuesday that a U.S.-India trade deal was at a “very advanced stage” but conceded he didn’t have a timeline for the conclusion of a deal.

“I would try and look at the positive side, I’m not a soothsayer, I don’t know when trade deals will get signed, how long it takes … but I think one [everybody] needs to chill a bit,” he told CNBC’s Amitoj Singh, as India and the EU announced a landmark trade deal.

“I’m told by the people who are in it [the negotiations] that it’s at a very advanced stage, and I’m hoping that, sooner rather than later, it will also see the light of day,” he added of the U.S. deal.

The EU and India described their agreement as the “mother of all deals” and while the accord sees the two countries ally themselves at a time when global trade is under strain from tariffs, sanctions, and geopolitical rivalry, it does not reduce India’s desire for a deal with the U.S., analysts at global risk consultancy Teneo noted.

The deal “reduces (though not eliminates) the pressure on India to conclude a deal with the US which remains its largest trade (in both goods and services) and defense partner,” analysts Arpit Chaturvedi and Carsten Nickel said in emailed comments Tuesday.

Citi analysts said Wednesday that markets will be “keenly watching immediate repercussions” of the EU-India deal on India-U.S. tariff talks.

“There would be hope that those negotiations might be fast-tracked now though it remains to be seen whether Indian authorities would be in a better position to withstand the higher U.S. tariffs given the easier access to the large EU market.”

Shumita Deveshwar, chief India economist at TS Lombard, noted that there were a number of sticking points preventing an immediate agreement.

“A free trade deal with the EU after nearly 2 decades of negotiations couldn’t come at a better time for India, which is struggling to strike an agreement with the U.S.,” she said in emailed analysis Wednesday.

“Trade talks with the U.S. are stuck owing to its insistence on getting greater access to India’s farm market and for India to stop buying cheap Russian oil …Agriculture is a highly politically sensitive sector in India given the low level of farm mechanisation and vast numbers of subsistence farmers. However, India does seem to be scaling back its Russian oil purchases,” she said, noting such purchases had fallen to their lowest level in two years in December.