Summary
A person familiar with the process has told The Hindu that India and the US are unlikely to sign a trade deal until Washington opens fresh Section 301 investigations into India's competitors, such as Pakistan, Sri Lanka and the Philippines.
In February 2026 the US Supreme Court ruled that IEEPA-based reciprocal tariffs were unlawful. Since then, the US has relied on Section 301 probes. India is the only country on the "excess capacity" probe list, while its rivals were probed only for forced labour.
That leaves India likely to face 18% against Pakistan's 10%. A deal is therefore unlikely around Commerce Minister Piyush Goyal's visit for the G-20 trade ministerial.
WHY IN NEWS FOR UPSC & STATE PCS
The Hindu reported from Washington that the India-US trade deal is stuck because of an uneven set of Section 301 investigations launched in March 2026. India is probed for both excess capacity and forced labour, while Pakistan, Sri Lanka and the Philippines are probed only for forced labour.
The source called Pakistan's exclusion from the excess-capacity list a "strategic mistake." Separately, the Lindsey O. Graham Sanctioning Russia and Iran Act, signed into law last week, allows tariffs of up to 100% on the top importers of Russian oil and India is one of them.
Standard News
India Isn't Negotiating Its Own Tariff. It's Negotiating Pakistan's.
The absolute tariff rate is a distraction. For an exporter, what counts is the gap between their duty and a rival's duty on the same product at the same US port. Read that way, India's refusal to sign until Washington probes its competitors is not stalling. It is the only logical position.
How the
arithmetic flipped Under the interim deal announced on February 6, 2026, Indian goods faced a general US tariff of 18%, a little below Pakistan and Bangladesh at 19% and Vietnam and Sri Lanka at 20%. It was a narrow edge, but a real one for labour-intensive exporters competing on thin margins.
Then on February 20, in Learning Resources v. Trump, the US Supreme Court held that IEEPA, the 1977 emergency-powers law, did not allow the President to impose those reciprocal tariffs. The whole structure was scrapped and rivals went back to ordinary MFN terms.
Washington's replacement is Section 301 of the Trade Act of 1974. Unlike a blanket emergency tariff, a 301 tariff needs a country-specific investigation. In March 2026, USTR opened two sets of probes:
- Forced labour: India, Pakistan, Sri Lanka and the Philippines. Pakistan now faces 10%.
- Excess capacity: India alone. It is likely to add 8%, taking India back to 18%. The result is that India's former advantage becomes a disadvantage of roughly eight points against Pakistan and there is currently no legal instrument that would raise tariffs on India's rivals.
What each side is calculating India will not lock in a deal that turns an 18-versus-19 edge into an 18-versus-10 handicap.
Pakistan is, as The Hindu puts it, "the most politically sensitive country in New Delhi's calculus." Accepting a worse rate than Pakistan would be economically costly and politically very difficult at home. That is why Commerce Secretary Rajesh Agrawal has spoken of an architecture with "differentials and preferential market access": India wants its advantage written into the deal's structure. Washington needs every tariff to rest on a 301 investigation that can survive challenge.
It cannot simply announce a rate for Pakistan. It has to investigate first. Leaving Pakistan off the excess-capacity list, which the source calls a "strategic mistake," means the fix takes time. The US also gains leverage from delay while it presses India separately on Russian oil through the new Graham Act. India's competitors benefit from inaction.
Every month without new probes is a month in which they undercut Indian exporters.
Where the
balance sits For now, time is on Washington's side, not India's. India's sensible move is to link any signature to the US opening fresh 301 probes on its rivals. Whether it can hold that line while facing possible tariffs of up to 100% over Russian oil is the real test of India's leverage.
Quick Facts
Key numbers & takeaways — revise these first
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Section 301 of the US Trade Act of 1974 allows the US Trade Representative to investigate and respond to unfair trade practices by other countries.
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In Learning Resources, Inc. v.
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Trump, decided on February 20, 2026, the US Supreme Court held that IEEPA does not authorise the President to impose reciprocal tariffs unilaterally.
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India and the US announced an interim trade agreement in a joint statement on February 6, 2026.
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The Section 301 investigations into excess capacity and forced labour were launched in March 2026.
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The Lindsey O.
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Graham Sanctioning Russia and Iran Act of 2026 allows tariffs of up to 100% on countries buying Russian oil and gas.
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India is the second-largest market for Russian crude oil.
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The G-20 trade ministerial in the US begins on September 30, 2026.
Connect the dots for your UPSC preparation.
Standard news covers the event. Log in to read our comprehensive analysis and uncover the hidden constitutional, structural, and ethical dimensions of this topic:
The four structural reasons the India-US deal is stuck, from the IEEPA ruling to the investigation-by-investigation logic of Section 301.
How the Graham Act's threat of 100% tariffs over Russian oil gives Washington a second lever over New Delhi at the same moment.
What is working and what is failing in India's strategy of linking its signature to probes of its rivals and the risks that strategy carries.
A short-term and long-term way forward, including diversifying export markets and India's position on unilateral tariffs at the WTO.
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