The US has been asking India to open up a couple of sensitive sectors – agriculture and dairy - as part of the bilateral trade agreement, and this is the primary reason for the two countries not able to close the bilateral trade talks, ‘despite being very near to the closure’, said a government source on Friday. The official further said that the US wanted India to open some part of the agricultural and dairy sector under trade agreement.
“We have been close to the deal several times. Most of the terms have been negotiated. But they asked to open some sectors which are protected in India, even if partially. Now, with a country where the majority of the livelihood is dependent on agriculture, we can’t risk opening it,” said the official. From India’s end, there are no further demands that need to be addressed and thus, both the countries aim to have a mutually beneficial trade deal.
Speaking on the All-In Podcast on January 8, 2026, US Commerce Secretary Howard Lutnick said the long-anticipated India–US trade agreement lost momentum after Prime Minister Narendra Modi did not personally reach out to then US President Donald Trump to close the deal. According to Lutnick, Washington saw the call as critical to finalising negotiations. Although Modi later agreed to make the call, he said it came too late, with the US having moved on to sealing trade pacts with Indonesia, the Philippines and Vietnam, pushing India out of that round of agreements.
Uncertainties loom further over India as President Donald Trump gave a heads up for a bill that aims to impose 500% tariffs on countries trading with Russia. And India being one of the highest importers of Russian oil, exporters fear another round of tariff. The Ministry of External Affairs (MEA) responded on Monday saying that they are “fully aware” of the proposal and “carefully monitoring” the situation. MEA even confirmed that Modi has made eight calls to the US president in the last year.
The US imposed 50% on several Indian exports including sectors like textiles, leather, apparels, carpets etc as a penalty for purchasing Russian oil. Despite tariffs being imposed, India's merchandise exports to the US went up by 11.38% to $59.04 billion from April–November FY26, with a surge in exports of engineering goods, chemicals, and farm products, according to the data of the Commerce Ministry. Also on a year-on-year basis, shipments to the US rose more than 22% in November as compared to the same month a year earlier.