India-US trade talks: Former diplomats say better no deal than a bad deal amid Section 301 tariff threats
Speaking to CNBC-TV18, both former envoys argued that any agreement lacking reciprocity and certainty could leave India vulnerable to future trade actions from Washington even after a deal is signed.
“Better not to have a bad deal and instead wait for some more time to iron out those differences,” Trigunayat said, pointing to the uncertainty created by fresh tariff threats from the US administration.
His remarks come as negotiations on an interim framework for a bilateral trade deal are set to conclude, with a US delegation led by Assistant US Trade Representative and Chief Negotiator Brendan Lynch holding discussions in India this week. US Ambassador to India Sergio Gor recently said that 99% of the interim agreement had been finalised and talks were focused on the remaining 1%.
However, the talks have been overshadowed by a fresh proposal from Washington to impose duties on 60 countries under Section 301 of the US Trade Act. India faces a proposed levy of 12.5% following a US investigation into alleged failures to enforce forced-labour import restrictions. Another Section 301 investigation into structural excess capacity remains ongoing.
Dasgupta said India should resist pressure to sign an agreement that does not offer balanced concessions from both sides.
“There is no reciprocity in this agreement because the US is not reducing its tariffs one bit on any item. Not one,” he said. “We have to stand up and fight for reciprocity. Fair, equitable and balanced is what we have been saying all these months.”
According to a report by the Atlantic Council, the combined impact of the two Section 301 investigations could potentially generate about $12 billion in additional revenue from Indian exports if further levies are imposed. The think tank estimates that a second round of duties could be around 20%.
Dasgupta warned that accepting a deal under pressure could expose India to repeated demands for additional concessions.
“If we sign an agreement and tomorrow the US says that we must give further concessions or be slapped with duties under this new Section 301 action, which is yet to be decided, and the day after they start another Section 301 investigation, there is no end to it,” he said.
While acknowledging that sectors such as textiles, clothing, leather, gems and jewellery could face challenges if higher tariffs are imposed, Dasgupta argued that India should not accept what he described as unilateral pressure tactics.
Trigunayat echoed those concerns, saying that a trade deal alone would not necessarily shield India from future tariff actions by Washington.
“We have seen that it is not the case that if you sign an agreement, you are guaranteed freedom from tariffs,” he said, noting that the United States has previously imposed additional duties on several trading partners despite existing arrangements.
He added that advanced economies have long relied on non-tariff barriers linked to labour, environmental and governance standards, and that Section 301 investigations could be invoked repeatedly on different grounds.
“The whole purpose of having an agreement is to provide certainty both for exporters and importers as well as for governments. But if that certainty is not going to be there, then once again you are under tremendous stress,” Trigunayat said.
The former diplomat also pointed to growing US pressure on energy trade. Ahead of the negotiations, US Secretary of State Marco Rubio said Washington wants India to increase purchases of American oil and gas and also suggested Venezuela as an alternative source.
Recent data from Kpler shows India has already increased energy imports from both countries. The US became India’s largest supplier of LPG in May, while crude oil shipments from the country more than doubled during the month. Venezuela emerged as India’s fourth-largest oil supplier.
Despite the concerns, both former diplomats stopped short of ruling out an interim agreement before the July 24 deadline, when the current 10% US tariff arrangement is due to expire.
Dasgupta said a deal could still be reached but cautioned that major issues would likely remain unresolved. “There will be very large gaps on which I don’t think there will be an agreement before July 24,” he said.
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Trigunayat said an interim pact may materialise for political and diplomatic optics, but warned that implementation could prove far more difficult.
“For the optics, having a deal is one thing, but having it operationalised smoothly is another. That is something I don’t foresee, at least for the next few years,” he said.