India has said its trade deal negotiations with the US are still on track even as Washington placed India on a new watchlist for countries it says could be aiding China to avoid tariffs by redirecting goods. The announcement underscores that the deal is not dead, but the final stretch may now arrive with intensified U.S. enforcement pressure.
Trade talks continue
Unfounded claims: Commerce Minister Piyush Goyal has dismissed reports on the basis for delaying a move and said negotiations with the U.S. continue to be moving ahead, calling assertions of a slowdown ‘fallacious, unfounded & misleading.’ Indian officials have also contended the talks are for a balanced and commercially meaningful deal.
India and the U.S. have made significant headway on a mini-trade deal, with negotiations continuing towards a more comprehensive bilateral trade pact, Reuters has reported multiple times in recent months. Three to four months after in July, a senior U.S. official said the deal could be signed.
Watchlist pressure
And now, a new complication: Washington’s crackdown on transshipment. On 12 and 13 August, reports said that the U.S. had put India on a list of over 40 economies it suspects may be trans-shipping Chinese exports to dodge U.S. tariffs.
India was categorized as high risk and the U.S. may include anti-transshipment clauses in future trade agreements, had said those reports. That could mean even more trouble for customs compliance and supply-chain tracing in the India-U. S. negotiations.
Why it matters
India needs the trade deal because exporters want access to U.S. markets and tariff conditions that enhance their competitiveness against rival suppliers. New Delhi had maintained that the pact ought to result in tangible benefits for businesses, farmers, workers and consumers.
It is a tougher stance on tariff dodging and supply-chain loopholes for the U.S. In other words, that trade agreement isn’t just about market access and tariff cuts but also the policing of cross-border trade flows on both sides.
Deal backdrop
The India-U. The U.S.-China trade relationship has been trending toward a framework agreement since both governments announced an interim structure for trade earlier this year, accompanied by the announcement of more comprehensive bilateral agreements on the agenda. Statements in the United States and India in 2026 suggested that key elements had already been concluded, although it still hadn’t yet signed.
That is why the recent development matters. The negotiations, though not visibly stalled, are, however perhaps tangled up in Washington’s concerns about transshipment, which could be reflected in how any final text is worded and where safeguards or mechanisms for enforcement may lie.
Outlook
So far, the two sides’ message is that the deal’s still functioning. The complexity of bargaining is due to U.S. watchlist, and the final agreement will arguably hinge on whether India can convince Washington that its commercial routes are not being used for goods from China to escape tariffs.
Although an obvious hawkish outcome for India is a deal which maintains its export competitiveness without anything too drastic in new trade restrictions. Future rounds of talks will likely decide whether the two objectives can be accommodated in a single deal.