India’s diplomacy and FTA negotiations – A turbulent path

The two sides aim to reach a limited agreement by early autumn, ahead of a potential reimposition of US tariffs after July 9. However, substantial differences remain, and India is insisting on review clauses to account for the unpredictable shifts in US trade policy.

Pressure at home—and abroad

Domestic resistance has hardened.  Some domestic groups warn that concessions on data or agriculture could hollow out India’s digital public infrastructure and jeopardise food security. At the same time, the global context feels almost war-like: the US is still sparring with China despite a fragile June tariff truce that only trims average duties to about 30 per cent. That volatility reinforces India’s insistence on clauses that can be revisited if Washington’s tariff mood swings again.

A contrasting chapter with Europe

While the US track crawls, the India-EU Free Trade Agreement (revived in 2022 after an eight-year freeze) has gained momentum. In mid-May, the 11th negotiation round closed five chapters, including customs facilitation and intellectual property, and External Affairs Minister S. Jaishankar now calls a complete deal by end-2025 “feasible.”

Prime Minister Modi echoed that optimism in Cyprus on 16th June, pitching the FTA as the economic spine of the planned India–Middle East–Europe Corridor.

Sticking points remain familiar: Brussels wants steeper cuts on wine and automobile duties and firm dairy quotas; Delhi seeks more unrestricted movement for services professionals and safeguards that sustainability rules will not morph into disguised protectionism. Negotiators say the EU is at least willing to discuss phased timelines and recognise Indian geographical indications— flexibility that India highlights when asked why it is progressing more cautiously in talks with the US .

India’s emerging playbook

Viewed together, the two tracks illuminate New Delhi’s new trade doctrine:

1. Credible exit: Having already walked away from RCEP and slow-rolled a UK mini-deal, India can plausibly threaten to leave the table, however we are constrained for geopolitical and trade reasons (critical minerals, AI, Semiconductor technologies) at engaging with the West for trade, defence and security reasons.

2. Issue-by-issue calibration: Delhi now ties concessions to geopolitical context—more flexibility with Europe and Gulf partners building “friend-shored” supply chains; more caution with Washington, where tariff policy changes overnight.

3. Sovereignty first: Whether on data, patents or dispute settlement, negotiators start from the premise that policy space is a strategic asset, not a bargaining chip.

What an India-US mini-deal may look like

If a July sprint succeeds, expect something deliberately narrow: a partial rollback of US steel-and-aluminium duties, modest tariff cuts on Harley-Davidsons and select farm lines, restoration of India’s Generalised System of Preferences benefits, and a review clause that lets both capitals revisit flash points after the 2026 US mid-terms. Anything deeper—data flows, ISDS or big-ticket farm access—looks unlikely for the time being.

The bigger picture

The atmosphere of economic confrontation—tariffs deployed like missiles, supply chains rerouted around real wars in Ukraine and the Red Sea, and rival tech blocs hardening—means trade policy now bleeds into security policy. For India, mastering this harsher terrain is no longer optional. Whether it signs a breakthrough with Washington, delivers a landmark treaty with Brussels, or chooses strategic delay, New Delhi has made it clear: the era of quick, optics-driven trade deals is over; cautious, sovereignty-anchored engagement is here to stay.

(Sanjay Notani is a Partner with Economic Laws Practice.)

Views are personal and do not represent the stand of this publication.