India's US trade deal would not remove most of the tariffs now hitting its exports

The US Trade Representative, Jamieson Greer, told a press conference at the G20 Trade Ministerial in Milwaukee that talks with India are "in the short strokes" but that "I don't think there's something imminent", The Hindu reported on 2 October. A day earlier Piyush Goyal, India's Commerce and Industry Minister, said on X that the two had held "a productive discussion ... towards early conclusion of a mutually beneficial interim agreement under the India-U.S. Bilateral Trade Agreement". The gap between those formulations matters less than what neither addresses: most of the American tariffs now sitting on Indian goods were not imposed under the reciprocal-tariff heading the interim agreement is meant to settle, and signing it would not remove them.

The tariffs India is actually paying

There are four instruments on three legal tracks. According to The Hindu, the USTR applied additional forced-labour tariffs in July 2026 to 60 countries after an investigation, with India's rate set at 10 per cent. Steel and aluminium carry Section 232 tariffs of 50 per cent. The USTR is separately investigating the same 60 countries for structural excess capacity, an inquiry The Hindu reports could produce further tariffs on India. And the Lindsey O. Graham Sanctioning Russia and Iran Act, 2026, now law, authorises tariffs of up to 100 per cent on large importers of Russian oil.

That last threat has been examined elsewhere; the point here is the rest. The Hindu's editorial of 21 September noted that the prospective 100 per cent would come "over and above the 10% 'forced labour' tariffs and the 50% Section 232 tariffs on steel and aluminium", and that the US takes about 20 per cent of India's goods exports. An interim deal on reciprocal tariffs leaves the forced-labour surcharge, the metals tariffs and the excess-capacity file where they are. Each has its own statutory basis and its own remedy, and none is a tariff India can trade away with market access.

This is part of why the February 2026 commitment has not closed. On The Hindu's account, Narendra Modi and Donald Trump issued a joint statement that month undertaking to finalise an interim agreement and keep negotiating the wider Bilateral Trade Agreement, with the interim text due in March or April; neither has been concluded. Goyal has said India will not sign until it is clear it receives a comparative advantage over competitors.

India's answer is a WTO argument, made at an American-chaired forum

Goyal's intervention in Milwaukee was procedural rather than commercial. On forced labour, the Commerce Ministry release quoted by The Hindu has him calling India's commitment "absolute and unconditional", citing Article 23 of the Constitution, ratification of ILO Conventions 29 and 105, and a July 2026 amendment to the Foreign Trade Policy barring imports of goods made with forced labour. Border measures, he argued, must rest on "specific and verifiable evidence rather than presumptions about entire countries, regions or sectors". On excess capacity he said India has none structurally in the sectors the G20 presidency identified, and that distortion concerns belong in anti-dumping and countervailing proceedings subject to judicial review. Diversification of supply chains, he added, "cannot be used as a pretext for measures outside WTO rules".

The venue is part of the story: the G20 presidency for 2026 is American, so India was arguing for multilateral discipline in a forum chaired by the government applying the unilateral measures.

The hedge runs on a December calendar

India's practical response is bilateral. The India-New Zealand FTA enters into force on 20 October; The Hindu's editorial of 24 September put bilateral goods trade at $1.1 billion, less than 1 per cent of India's total, while noting India won duty-free access on all of its exports.

The larger item is Europe. The European Commission said on 11 September that it had put proposals to the Council for signature and conclusion of the EU-India FTA, describing it as the largest trade agreement either side has concluded; it puts current two-way trade at over EUR 180 billion a year and says the deal will eliminate or reduce tariffs on 96 per cent of EU goods exports to India, saving around EUR 4 billion a year in duties. Goyal said on 1 October that he and Trade Commissioner Maroš Šefčovič had "reviewed progress towards the signing and entry into force of the India-EU FTA"; The Hindu reports the signature is expected on 16 December during Modi's visit to Brussels, with entry into force in early 2027 once the European Parliament consents.

Two qualifications follow from the Commission's own documents. Entry into force is not in India's gift: Council adoption, signature, European Parliament consent and a final Council decision all precede it, in that order on the Commission's question-and-answer page. And the agreement is narrower than the headline — the Commission states that geographical indications and investment protection are being negotiated separately, and its published summary of benefits does not mention the carbon border adjustment mechanism at all.

India's own economists rank the hedge last

The sharpest assessment of this strategy came from inside the Indian government. The Department of Economic Affairs' Monthly Economic Review for September 2026, reported by The Hindu on 1 October, cited the WTO's World Trade Report 2026 scenarios for 2050 against baseline. In a "geo-fragmented world" organised around geopolitical blocs, global GDP falls 5.1 per cent and global exports 18.6 per cent. In an "FTA world", where the multilateral system is replaced by a network of agreements with non-cooperative tariffs on non-partners, the losses are larger: 6.9 per cent of GDP and 26.9 per cent of exports. Under "enhanced cooperation" both rise, by 2.9 and 17.9 per cent. The ministry's economists concluded that bilateral and regional deals complement the system when they operate within WTO rules but raise costs when used to substitute for it, producing "greater trade diversion, higher trade costs, and greater uncertainty".

The position is coherent and uncomfortable at once. India is signing agreements in the category its own finance ministry models as the worst available world, because what its largest single market currently offers is a set of unilateral instruments there is nothing to negotiate against.

What to watch

• Whether an interim India-US agreement, if concluded, touches the 10 per cent forced-labour surcharge and the Section 232 metals rates or only reciprocal tariffs.
• Whether the USTR's structural excess capacity investigation produces a tariff rate for India, and on which sectors.
• Whether the Council adopts the EU-India FTA in time for a 16 December signature, and whether the separate talks on geographical indications and investment protection conclude before it enters into force.

Sources

• The Hindu — USTR Greer says he does not think "something is imminent" on trade deal with India
• The Hindu — Commerce Minister Goyal defends India against U.S. forced labour and excess capacity investigations
• The Hindu — Commerce Minister Piyush Goyal meets U.S. Trade Representative Greer, discusses trade deal
• The Hindu — Trade deals that undermine multilateralism may hit growth and exports, govt economists warn
• The Hindu — Serious escalation: On the U.S., Russia Sanctions Act and India
• The Hindu — Trading smart: On the India-New Zealand FTA
• European Commission — Commission presents landmark India trade deal to Council for signature (IP/26/1842)
• European Commission — Questions and answers on the EU-India Free Trade Agreement (QANDA/26/185)
• European Commission — The EU-India trade agreement