After five rounds of commercial negotiations, the Indian authorities were so confident in ensuring a favorable deal with the United States that they even signaled to the media that tariffs could be limited to 15%.
Indian authorities expected US President Donald Trump himself to announce the agreement weeks before the deadline of August 1. The announcement has never been made.
Nova Delhi is now faced with the surprising imposition of a 25% rate on Indian products from Friday, along with unspecified penalties on Russian oil imports, while Trump closed larger agreements with Japan and EU, and even offered better conditions to Archirrival Pakistan.
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Interviews with four Indian government officials and two US government officials revealed details not previously disclosed about the proposed agreement and an exclusive report of how negotiations collapsed, despite technical agreements on most issues.
Authorities on both sides said that a mixture of political assessment errors, lost signs and bitterness prevented the agreement between the largest and fifth economy in the world, whose bilateral trade is worth more than $ 190 billion.
The White House, the Office of the US Commerce Representative and the Indian Prime Minister’s Office, along with the Ministries of Foreign Affairs and Commerce, did not respond to requests for comments sent by email.
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India believed that, after visits by Indian Minister of Commerce Piyush Goyal, Washington, and US Vice President Jd Vance had made a number of concessions that would close the deal.
Nova Delhi was offering zero rates on industrial products representing about 40% of US exports to India, two Indian government officials told Reuters.
Despite domestic pressure, India would also gradually reduce US car and alcohol rates with quota and accept Washington’s main demand for higher energy and US energy imports, authorities said.
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“Most of the differences were resolved after the fifth round in Washington, increasing hopes of a breakthrough,” said one of the authorities, adding that negotiators believed the US would accommodate India’s reluctance to agricultural imports and US -free dairy products.
It was a calculation error. Trump saw the issue differently and wanted more concessions.
“There was a lot of progress on several fronts in the negotiations with India, but we never reached an agreement with which we felt well,” said a White House authority.
“We never came to a complete agreement – an agreement we were looking for.”
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Overconfidence, calculation error
India Prime Minister Narendra Modi, who visited Washington in February, agreed to seek an agreement until the 2025 fall (in the northern hemis) and more than double bilateral trade to $ 500 billion by 2030.
To fill the $ 47 billion gap in the goods, India has pledged to buy up to $ 25 billion in US energy and increase defense imports.
However, the authorities now admit that India was overly confident after Trump spoke about a “great” imminent agreement, interpreting him as a sign that a favorable agreement was underway. New Delhi then hardened her position, especially in relation to agriculture and dairy, two areas highly sensitive to the Indian government.
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“We are one of the fastest growing economies, and the US cannot ignore a 1.4 billion market,” said an Indian authority involved in the negotiations in mid -July.
Negotiators pressured for a relief of the average US rate announced in April, as well as a reversal of steel, aluminum and cars.
Subsequently, India reduced their expectations after the US signed business agreements with important partners, including Japan and the European Union, hoping to secure a similar rate of 15% with fewer concessions.
This was unacceptable to the White House. “Trump wanted an announcement that would call attention, with broader access to the market, investments and large purchases,” said a source of Washington familiar with negotiations.
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An Indian authority acknowledged that New Delhi was not ready to match what others offered.
South Korea, for example, signed an agreement shortly before Trump’s August 1st period, guaranteeing a 15% rate instead of 25% by offering $ 350 billion in investments, higher power imports and rice and beef concessions.
FAILURE IN COMMUNICATION
“At one point, both sides were very close to signing the deal,” said Mark Linscott, a former US commercial host who now works for a lobby group that is close to discussions between the two nations.
“The missing component was a direct line of communication between President Trump and Prime Minister Modi.”
An employee of the White House vehemently contested this statement, noting that other agreements were resolved without this intervention.
An Indian government authority involved in the conversations said Modi could not have called a unilateral conversation with Trump that could put it in check.
However, the other three Indian authorities said Trump’s repeated comments about the mediation of conflict between India and Pakistan further impaired negotiations and contributed to Modi to make a final connection.
“Trump’s comments about Pakistan were not well accepted,” one of them said. “Ideally, India should have recognized the role of the US, making it clear that the final decision was ours.”
A graduated authority of the Indian government attributed the collapse to the lack of discernment, saying that the main Indian advisers misused the process.
“We lacked the necessary diplomatic support after the US closed better deals with Vietnam, Indonesia, Japan and the EU,” the authority said.
“We are now in a crisis that could have been avoided.”
Trump said on Tuesday that he would increase the tariff on imports of the current rate of 25% “very substantially” in the next 24 hours and claimed that Russian oil purchases by New Delhi were “feeding the war” in Ukraine.
Next Steps
The conversations are underway, with a US delegation being expected in Delhi later this month, and the Indian government officials still believe the deal can be recovered from here.
“It’s still possible,” said a White House employee.
The Indian government is reviewing the areas of agricultural sectors and dairy products in which concessions can be made, the fourth authority said. Regarding Russian oil, India could reduce some purchases in favor of US supplies if the price is equaled.
“This will probably require direct communication between the prime minister and the president,” said Linscott.
“Take the phone. At the moment, we are in a situation of losing or losing. But there is a real potential for a trade agreement where everyone wins.”
