India-US trade talks hit a plateau, with little room left to give or take, says Finance Minister Nirmala Sitharaman

India and the US appear to have reached a plateau in negotiations for a trade agreement, Finance Minister Nirmala Sitharaman said, indicating that further concessions from either side could prove difficult after what she described as a hard and very rigorously negotiated agreement.

“The agreements, negotiations are still ongoing, although we like to believe that both sides have reached a plateau, beyond which giving or taking might be very, very difficult,” Sitharaman said in a discussion at the Munich Leaders Meeting in New Delhi.

Also Read: Nirmala Sitharaman calls for open, rules-based global economic ties amid geopolitical tensions


She added that there could still be scope for movement if both sides found room to negotiate further. “But maybe if there are room, if there are rooms to operate from, both sides could do it,” she said.

Trade imbalance remains key US concern

Sitharaman added the US was seeking to address its trade imbalance with India through means beyond traditional negotiations, with tariffs increasingly being 'weaponised' to push countries to reduce their trade deficits. She said this marked a shift from the earlier approach, when trade imbalances were addressed through dialogue, with countries negotiating greater market access and concessions from each other.

Sitharaman's comments come as India and the US continue negotiations on a trade agreement aimed at expanding market access and addressing concerns over bilateral trade. She said the trade balance remained a key consideration for the US, which has been seeking to reduce its deficit with India.

“The trade balance is very much in our favour. Naturally, the deficit is there in their site, all the balance is going unfavourably for the U.S. So they would want to reduce that imbalance,” she said.

According to Sitharaman, the US would want to address the imbalance in bilateral trade and seek to recover some of what it believes it has lost over the years.

“And their desire would be to see as much as possible, get some kind of, from their point of view, making up for all that they've lost over these years,” she said.

Tariffs increasingly used to address imbalances

The finance minister said the question of trade imbalances had become increasingly complicated as countries were moving beyond traditional negotiations to address such gaps. She drew a comparison with India's trade relationship with China, where the trade imbalance has widened significantly since 2014.

“If that principle of trade imbalance, which has to be reduced for them to consider anything more, I would think that is the way in which the US would look at China, or India would look at China,” she said. “The trade imbalance with China for India, for instance, since 2014, has been growing exponentially.”

Sitharaman said trade negotiations had traditionally allowed countries to highlight discrepancies and seek to correct imbalances through reciprocal market access.

“Negotiation used to be the only platform through which countries could highlight the discrepancies, highlight the lopsidedness, and say would we want to correct this? And how would you correct it?” she said.

Also Read: India's resilience built over past decade, structural autonomy key to future: Nirmala Sitharaman

But she said tariffs were increasingly being used as another tool to address trade imbalances. “Now, the imbalance is being sought to be addressed through other means, where you rightly said, tariffs become weaponized,” Sitharaman said.

“Tariff was an instrument of negotiation. And tariff had a certain framework within which you will apply it. Today, framework is there, Tariff, some way.”

Trade deals and the jobs question

Sitharaman said sectors such as footwear, textiles, toys and processed material components are largely dominated by micro, small and medium enterprises and are highly labour-intensive. She said greater market access in the European Union could therefore have a direct impact on employment, particularly in sectors such as textiles that have a significant share of women workers.

She said stronger access to the EU market would help these industries expand exports and create more jobs, making trade agreements an important driver of employment. “When these items find an access into a large market like the European Union, these are segments which are going to generate more jobs, more exports, more jobs,” she added.

Supply chains reshape trade partnerships

The finance minister said the changing global trade environment had also made supply-chain security an important part of bilateral agreements.

“Today, you want to be conscious that the supply chains are not going to be disrupted. But where the supply chains have already got disrupted, you're finding a newer partner to ensure that supply chain continues.”

She said countries were increasingly tailoring trade agreements to protect their national interests while navigating a difficult global environment. “Okay, ultimately, you're tailoring the agreement, to keep national interest alive, but to survive in a very challenging global environment, where no WTO related laws have been left to be respected. Everybody has broken the law here and there. And so you're making it up now.”

Bilateral deals gain importance

Sitharaman said the disruption in global trade is pushing countries to look for newer trading partners and deepen those relationships through bilateral agreements. As supply chains are being reshaped, governments are increasingly seeking more dependable partners and formalising those ties through trade deals.

She said this shift towards bilateral and regional arrangements does not mean multilateralism is going away. Countries will continue to engage through multilateral frameworks, but the weakening of the institutions that support the global trading system has made bilateral partnerships more important.

Sitharaman said institutions meant to guide, monitor and regulate countries and keep the multilateral system on track have weakened over the decades. This erosion of institutional strength, she said, has contributed to the growing preference for countries to secure trade relationships through direct agreements with individual partners.

India-EU deal brings sectoral sensitivities

Sitharaman also said the negotiations with the US should be viewed against the wider transformation in global trade, where tariffs and trade imbalances are playing a greater role in shaping bilateral relationships.

The comments come as India is also negotiating trade arrangements with other major economies and blocs, including the European Union, where sector-specific sensitivities have played a significant role.

She said the size and purchasing power of India's middle class made an agreement between India and the EU particularly significant, while noting that negotiations had to account for sensitive sectors on both sides.

“The size of the middle class, which has got buying capacity, which is in India, you've tied up two very powerful economies,” she said.

Sitharaman pointed to agriculture as one area where both sides have significant sensitivities, including dairy, meat and soya.

“Each of our interests, where sensitivity sensitivities lie, whether it is agriculture for us, agriculture equally for European Union, items within agriculture which are even more sensitive, whether it's dairy or your meat for the European Union, whether it is soya for us, again dairy for us, and so on,” she said.

The finance minister said India had opened up as much as the European Union in the negotiations, while suggesting that the final shape of such agreements would depend on how individual sensitivities were addressed.

For the India-US agreement, however, Sitharaman's latest remarks suggest that the negotiations have entered a stage where further movement could require difficult choices from both sides.