Trade negotiations between India and the United States have hit significant roadblocks, primarily due to diverging positions on genetically modified (GM) crops, medical device regulations, data localization norms, and reciprocal tariff exemptions. The standoff emerges just weeks ahead of the July deadline, when the US is expected to implement new tariffs under Section 232 of the Trade Expansion Act, a legal provision often invoked by former US President Donald Trump.

Negotiators from both countries met in New Delhi from June 5 to 10, in an attempt to finalize an interim trade agreement that would showcase early achievements ahead of a broader, more complex trade pact. However, the progress appears stalled over several key issues that neither side is willing to compromise on easily.

Sticking Points in Negotiations

1. GM Crops and Agricultural Market Access

One of the primary demands from the United States has been the opening up of the Indian agricultural sector to genetically modified (GM) crops. American negotiators are pushing for greater access for GM seeds and crops, citing fair competition and innovation in agriculture. However, Indian officials have remained firmly opposed, citing concerns over biodiversity, farmer interests, and domestic food safety standards.

India’s agricultural sector is politically sensitive, and any decision to allow GM crops is likely to face public backlash as well as resistance from various state governments and environmental groups. The Indian government has historically taken a cautious approach toward genetically modified organisms (GMOs), and there’s little indication that it will ease its stance under external pressure.

2. Medical Device Pricing and Regulation

Another significant point of contention is the price controls on imported medical devices, including stents and knee implants. The US has requested India to remove or significantly relax its price caps on these products, arguing that it discourages innovation and limits the availability of advanced medical technologies.

India, on the other hand, defends its pricing mechanism as necessary to ensure affordable healthcare access, particularly for the lower and middle-income populations. Health activists have consistently urged the government not to yield to external pressure from multinational companies, stressing the public health imperative.

3. Data Localization Norms

The data localization policy mandated by the Reserve Bank of India (RBI) requires companies to store Indian users’ data on local servers. The US views this as a barrier to digital trade, and is demanding that India relax these rules to facilitate free cross-border data flows, especially for tech companies operating in financial and digital services.

India maintains that data sovereignty is essential for national security, law enforcement, and consumer protection, and is unlikely to abandon its stand despite pressure from Washington.

India’s Demands and Retaliation Threats

While the US is pushing for greater market access and regulatory relaxation, India has made counter-demands that include:

• Exemption from existing US tariffs on steel, aluminum, and automobile exports

• Avoidance of proposed duties on pharmaceutical products

• A rollback of Trump-era protectionist measures

India has also warned of retaliatory tariffs if its concerns are not addressed. The reciprocal duties are scheduled to come into force on July 9, a date that now looms large over the ongoing negotiations.

The pharmaceutical sector is particularly important to India, which is a global leader in generic drug production. The US recently initiated Section 232 investigations into pharmaceutical imports, citing national security concerns, a move seen as a precursor to further duties. Indian officials view this as a strategic pressure tactic, and are actively lobbying for an exemption.

Trade Analysts Urge Caution and Balance

Trade experts have noted that although the tone of negotiations has hardened, there is still room for compromise, particularly on smaller, sector-specific issues.

Ajay Srivastava, the founder of Global Trade Research Initiative, remarked that India appears to be offering more than what it is receiving in return. He pointed out that India is reducing its most-favored nation (MFN) tariffs, while the US has shown reluctance to extend reciprocal concessions.

“India should enter a deal only when it is balanced,” Srivastava said. “A small deal is very much possible, but there shouldn’t be pressure as India doesn’t have much to lose even if the deadline is missed.”

Srivastava’s comments underscore a broader sentiment among Indian trade strategists — that rushed deals should not come at the cost of long-term national interests, particularly when core sectors like agriculture, health, and data are involved.

Diplomatic Channels Remain Open

A delegation led by Brendan Lynch, Assistant US Trade Representative, held detailed meetings with Indian counterparts during his visit to New Delhi. While no official breakthrough was announced, sources confirm that both sides agreed to accelerate discussions, especially in light of the Group of Seven (G7) Summit in Canada, where Prime Minister Narendra Modi and Donald Trump are expected to cross paths.

This bilateral interaction at the G7 Summit could potentially unlock political will at the highest level, especially if both leaders aim to showcase progress in trade cooperation as part of their foreign policy achievements.

Geopolitical and Strategic Implications

Beyond trade numbers and tariffs, the India-US trade deal carries significant strategic weight. As tensions with China continue to escalate across domains — from technology to territorial disputes — both Washington and New Delhi see value in a deeper economic partnership. However, this partnership must respect sovereignty, developmental priorities, and regulatory autonomy.

India has consistently pushed for a more equitable trade relationship, one that does not replicate the imbalances seen with China or the European Union. This includes respecting domestic regulatory frameworks and avoiding strong-arm tactics from developed countries.

Conclusion: Clock Ticking, But No Need to Rush

As the July deadline approaches, both nations are working under time pressure, but there is growing recognition that a rushed, imbalanced deal could backfire. The India-US trade talks, while complex, also represent an opportunity for trust-building and mutual accommodation in a rapidly changing global order.

India’s position remains clear: any agreement must preserve national interest, protect strategic sectors, and deliver tangible economic benefits. If these conditions are met, a phased trade deal is still within reach. If not, India appears willing to weather short-term tariff shocks, confident in the resilience of its export-driven sectors and its growing economic clout on the world stage.

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