Nirmala Sitharaman says India-US trade talks have reached a plateau

Trade negotiations between India and the US may have hit a limit, with Finance Minister Nirmala Sitharaman warning that both sides have reached a plateau where further concessions will be difficult to secure.

Speaking at the Munich Leaders Meeting in New Delhi, Sitharaman said India cannot use a single template for trade negotiations with major global economies. She argued that India's recently concluded negotiations with the European Union should not serve as a blueprint for its ongoing, highly contested talks with Washington.

"The templates can exist for different countries in different parts of the world," Sitharaman said, pointing out that different partners bring entirely different geopolitical risks, supply-chain considerations, and trade balances.

The sticking point in US trade talks

Negotiations for a bilateral trade agreement between India and the US have been underway since February 2025, when Prime Minister Narendra Modi and President Donald Trump first announced the talks. However, the trade balance remains heavily tilted in New Delhi's favour.

"Naturally, the balance is unfavourable for the US, so they would want to reduce that imbalance," Sitharaman said. She noted that Washington is understandably trying to claw back the ground it has lost in recent years.

Data from the Directorate General of Foreign Trade shows the scale of the challenge. Total trade between the two nations rose to $140.77 billion in the 2026 fiscal year, up from $132.14 billion the previous year. Although India's trade surplus with the US narrowed slightly to $33.86 billion, Indian exports still dominated at $87.31 billion, compared to imports of $53.45 billion from the US.

Tailored deals and weaponised tariffs

By contrast, Sitharaman held up the India-EU agreement as an example of a successfully tailored pact, calling it the "mother of all deals" due to the sheer size of the two economies. Under that agreement, India opened up 92.5% of its tariff lines and 97% of its trade value, while the EU opened up 99% of its trade value.

Sitharaman argued that bilateral deals have become more appealing because multilateral institutions have weakened. "Multilateralism is not going to go away," she said, but noted that the erosion of bodies like the World Trade Organisation has made countries more confident about pursuing direct, two-way agreements.

This shift comes as global trade grows more defensive. Sitharaman pointed out that tariffs are increasingly being "weaponised" by nations seeking to address trade imbalances outside of traditional negotiations. She highlighted India's own growing trade deficit with China since 2014 as an area where India cannot simply replicate its Western trade strategies, but must instead rely on careful give-and-take negotiations.

A new investment framework

India is also preparing to overhaul how it handles foreign investment protection. Sitharaman announced that the government is moving towards a new template for bilateral investment treaties, incorporating lessons from recent pacts with the UAE, Oman, and Saudi Arabia.

Cabinet approval for the new framework is expected shortly. Mint previously reported that the Union cabinet would consider revising the decade-old investment treaty template to make it easier for foreign companies to pursue international arbitration over disputes in India.

Sitharaman confirmed that negotiations are already underway with Canada using elements of this new framework. India hopes to conclude investment protection agreements with at least three more countries by December, while the pact with Canada could be finished by the end of the year or early next year.