India and the US will finalise their interim trade agreement framework in line with “changed circumstances”, Commerce and Industry Minister Piyush Goyal said Saturday. This indicates that negotiations on the first phase of the bilateral trade agreement (BTA) are still underway, even as Goyal acknowledges that circumstances have changed since negotiations began under a framework agreed in February.This comes against the backdrop of the long-delayed trade deal with the US, with negotiations continuing for nearly a year. Earlier this month, Finance Minister Nirmala Sitharaman said that talks had reached a plateau beyond which a compromise would be difficult. This followed comments from United States Trade Representative Jamieson Greer last Friday that a trade deal was in its final stages, but not imminent. The two sides had agreed on an interim deal framework earlier this year, but negotiations have continued since then. While trade negotiators have suggested that they are making progress, much of the political signalling in the interim has suggested the opposite.Areas of progressThere are some positives. India figured in a list of 14 countries that, alongside the European Union, Australia and Japan, have “acknowledged” that structural excess capacity and production in any country pose significant challenges for all of its trading partners and have decided to take “effective actions” to address the challenge, the US government said last Wednesday. The joint statement released by the US after the G20 trade ministers’ meeting in Milwaukee comes amid the US Section 301 investigation into overcapacity and suggests some realignment of positions.The statement is significant on two counts. First, India being part of the joint statement could mean that the Office of the United States Trade Representative may not go ahead with fresh tariffs on India under Section 301. China is often accused of having overcapacity in sectors such as automobiles, electric vehicles, batteries, chemicals, semiconductors and solar panels.Also in Explained | India-US trade deal: Why a ‘modify commitments’ clause in framework agreement offers New Delhi wriggle roomSecond, tariffs on India were reduced from 12.5% proposed earlier this year to 10% after New Delhi issued a notification banning imports of goods produced through forced labour. The convergence on overcapacity between India and the US comes as the US is expected to release the results of the Section 301 investigation in a few weeks.The Section 301 investigation into overcapacity is evaluating countries such as China, the European Union (EU), Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan and India.Sticking pointsWhile the new Section 301 agreement suggests some tangible progress, the concerns in New Delhi are on two counts. One, whether entering into a deal, which entails significant concessions given the Trump administration’s approach to trade deals, will indeed result in any competitive tariff advantage for India over its competitors. Two, the US has on various occasions imposed fresh curbs despite having signed trade agreements. This was particularly evident in its dispute with Canada despite signing the United States-Mexico-Canada Agreement (USMCA) during Trump’s first term in 2020.Story continues below this adWhile India has not signed a trade agreement with the US, both countries reached a deal in February and released a joint statement. Ajay Srivastava, founder of the Global Trade Research Initiative, reiterated that while China has secured a tariff pause, India faces the threat of tariffs over Russian oil purchases.“On September 23, 2026, US Treasury Secretary Scott Bessent announced that Washington and Beijing had extended their Busan Agreement until January 10, 2027. During (President) Xi Jinping’s state visit to Washington, the two sides agreed to avoid new tariffs and trade restrictions on each other. The timing matters. Just five days earlier, on September 18, President Trump signed (the) Lindsey O. Graham Sanctioning Russia and Iran Act of 2026. It allows tariffs of up to 100% on major buyers of Russian energy.”China, he said, is among the largest buyers, yet the US–China understanding gives Beijing protection while India remains exposed.Also Read | US Supreme Court strikes down Trump’s tariffs: Could refunds to countries be on the table?“We saw this pattern in July 2025, when Washington spared China but imposed an additional 25% tariff on India for buying Russian crude. If Russian oil purchases are the issue, why does India face the tariff while China gets an exemption? The tariff threat appears aimed at forcing India to cut Russian oil purchases and sign a deeply unequal bilateral trade agreement. Washington could offer a lower rate in return for concessions, but that would give India no lasting certainty. India should not trade its energy security for temporary tariff relief or let US tariff threats dictate its national energy policy.”Story continues below this ad“It’s just two months (the China trade truce extension). The Chinese wanted it till the end of Trump’s term. That hasn’t happened. Our side has also expressed concerns to DC over the scope of the sanctions legislation. We will have to see how it goes from here, given that there are discussions on this issue that are coming up at the end of the month (the G20 trade ministers’ meeting in Milwaukee),” a government official said when asked for a reaction to the US-China trade truce extension.There is considerable unease in New Delhi regarding the arbitrariness with which India has been treated in trade negotiations by Washington DC, having faced some of the highest US tariffs imposed on any country last year, a move the US Supreme Court subsequently struck down. Currently, the talks have also been complicated by new US legislation that gives President Donald Trump the power to impose tariffs on buyers of Russian oil and gas.When the US Supreme Court invalidated the reciprocal tariff regime, the February framework that had offered to reduce India’s reciprocal tariff from 25% to 18% in return for concessions lost its sheen. Once the tariff regime was struck down, the value of the American concession became unclear.“While there has been considerable narrowing of differences since the February framework signing, the sticking points that remain continue to be too significant to be papered over. At this point in time, a situation of suspended animation, with somewhat lower tariffs, is perhaps a better option than getting into a deal involving significant concessions by India. There is uncertainty even after signing a deal, as multiple other countries are finding out,” an officer aware of the negotiations told The Indian Express.Lingering uncertaintiesStory continues below this adIndia and several other countries await the results of the Section 301 investigation into overcapacity. The government’s stance is that India does not have structural excess manufacturing capacity in the sectors identified by the G20 presidency, and that the country’s manufacturing capacity serves both domestic and global needs.Indian exporters have said that US buyers have become cautious and are refraining from placing large orders in a single country. This is having an impact on low-margin products such as footwear and textiles. However, US concessions on electronics and pharmaceutical imports have so far helped India maintain its overall export levels to the US. Without those, the figures would have been more adversely tilted against India.Also Read | Trump’s shock Russian diesel deal: One rule for India, another for the USGoods exports to the US showed a sharp 21% jump in August to $8.3 billion compared to August last year, when India began facing 50% tariffs. Between April and August, too, India’s exports jumped by over 6%, driven by electronics and engineering goods. India’s electronics exports jumped 89% to $5.5 billion compared to $2.9 billion.However, India’s imports from the US, driven by energy products, are also rising sharply. In August, imports went up by 65% to $5.97 billion. This comes as India has also been making several regulatory changes to aid American companies by lowering tariffs on US bourbon whiskey and motorcycles, among several other items. New Delhi has also announced a tax holiday for data centres and opened its nuclear sector, moves that align with US commercial interests.