India-US trade deal nears finish line, but Section 301 and tariff risks still loom, say experts
Speaking to CNBC-TV18, Dua said the US now appears “more keen than ever before” to conclude a trade deal with India, even as some substantive issues may still remain unresolved.
“The agreement was going to be signed in two tranches. It’s the first tranche about which Sergio Gor talked and which the Commerce Minister also referred to, saying we are more or less ready to finalise it,” Dua said.
His remarks come as trade talks between the two countries resume this week in New Delhi. President Donald Trump has sent a US delegation led by Assistant US Trade Representative for South and Central Asia Brendan Lynch, while the Indian side is being led by Darpan Jain, Additional Secretary in the Department of Commerce.
Commerce Minister Piyush Goyal said on Monday that most elements of the first phase of the deal had been finalised and only “small issues, commas and full stops” remained.
Last week, US Ambassador to India Sergio Gor said both sides were working to finalise the “last one percent” of the agreement.
However, experts warned that even if a deal is signed, India could still face trade action from the US under Section 301 of the US Trade Act of 1974.
“You’re absolutely right on that, because Section 301 gives the United States administration powers under the 1974 Trade Act to investigate alleged conscious efforts made by countries to promote their exports,” Dua said.
He noted that the investigations currently underway are not limited to India and involve several economies accused by the US of creating structural trade advantages.
Dua also cautioned that a bilateral trade agreement may not fully shield India from future American trade measures.
“A BTA, whether it is a first tranche or a later tranche, is also amenable to other US laws, including the Trade Act of 1974, which gives the President and his administration a wide number of powers to go around agreements or agreed tariffs,” he said.
The trajectory of India-US trade talks shifted after the US Supreme Court ruled against certain tariffs imposed by the Trump administration earlier this year. Government sources indicated that tariffs levied under Section 301 are expected to be discussed during this week’s negotiations, with India likely to seek relief from retaliatory actions taken under the provision.
Fabian said the Trump administration’s tariff actions had initially pushed India to diversify its trade relationships.
“President Donald Trump committed economic aggression against India by imposing tariffs on India,” Fabian said, adding that India subsequently started looking at other trading partners, including the European Union, the United Kingdom and New Zealand.
“Now it seems President Trump has realised that he did make an error in committing that aggression against India, so they want to have a deal,” he added.
Fabian, however, cautioned against rushing into an agreement without safeguarding India’s interests. “It is necessary for us to have a trade deal, but that does not mean we should sign on the dotted line,” he said.
One of the major sticking points in the negotiations remains energy imports from the US. India has already indicated its willingness to increase imports of American energy, technology and agricultural products as part of efforts to expand bilateral trade to $500 billion over the next five years.
But Fabian argued that pricing remains a concern.
“When we buy oil from others, the price is determined based on market value. When we buy from the United States, it is determined politically,” he said.
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Dua also acknowledged that India would weigh commercial viability carefully before committing to larger energy purchases from the US, particularly given the availability of alternative suppliers.
While both experts agreed that progress has been made towards finalising the first phase of the BTA, they stressed that uncertainty around tariffs, sanctions and US trade powers would continue to remain key concerns for India even after the deal is signed.