India’s trade agreement with the United States was delayed after Prime Minister Narendra Modi did not place a telephone call to US President Donald Trump to finalise negotiations, according to US Commerce Secretary Howard Lutnick. His remarks shed new light on why talks collapsed last year, eventually leading Washington to sharply raise tariffs on Indian goods.
Speaking on the All-In podcast on Friday, Lutnick said the deal was largely ready but required direct leader-level engagement to conclude. He claimed US officials expected Modi to speak with Trump to close the agreement, but said New Delhi hesitated. Lutnick added that the lack of communication prevented the final step needed to seal the pact.
Trade talks later broke down, and in August, Trump doubled tariffs on Indian exports to 50 per cent, the highest rate imposed on any country. The measures included a 25 per cent levy imposed in response to India’s continued purchases of Russian oil. More recently, Trump warned that tariffs could rise further unless India reduces those imports, increasing pressure on New Delhi.
Market reaction and diplomatic deadlock deepen uncertainty
Trump’s renewed warning this week pushed the Indian rupee to a record low and unsettled investors who have been awaiting progress in negotiations. Although India continues to seek a tariff rate between the concessions earlier offered to Britain and Vietnam, Lutnick said that proposal has since expired.
India’s trade ministry did not immediately respond to requests for comment on the remarks. However, Reuters previously reported that both sides came close to reaching an agreement last year before talks collapsed due to a communication breakdown.
According to an Indian government official involved in the negotiations, Modi avoided calling Trump out of concern that the conversation could become one-sided and politically risky. The official said such a call might have placed the prime minister in a difficult position without guarantees of reciprocal commitments.
Meanwhile, the stalled negotiations continue to weigh on bilateral trade relations. Analysts warn that further tariff increases could disrupt supply chains and slow export growth. As both sides signal firmness, prospects for reviving the deal remain uncertain, with markets watching closely for any diplomatic breakthrough.
