India and the United States of America have reached an accord on the framework for their trade deal under which Washington will levy 18% tariff on a range of imports from India. Yet, officials from both sides continue to speak with forked tongues. Donald Trump and his top trade negotiators insist that India has promised to halt crude oil imports from Russia — an assertion that finds no mention in the joint statement. The Indian side has maintained that it has not compromised the interests of its farmers. The joint statement, though, says India has agreed to “eliminate or reduce tariffs on all U.S. industrial goods and a wide range of U.S. food and agricultural products”, stoking concerns that India’s so-called red lines may be breached. The Union commerce minister, Piyush Goyal, has, however, tried to allay concerns by insisting that meat, poultry, all forms of dairy, GM food products, rice, wheat, pulses and sugar have been kept out of the deal with no scope for future US action in these areas.

Industry and markets are euphoric that the nightmare over US tariffs is about to end. But they must awaken to a few sobering truths. India currently enjoys a trade surplus of over $40 billion with the US. Delhi has agreed to purchase $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years. That looks like a tall order in view of the fact that India’s overall goods import from the US in 2024-25 amounted to $45.6 billion. The trade deal with the US could also dim the intensity of Narendra Modi’s vision of a Viksit Bharat. Coking coal — a vital input in steel making — is a case in point. Just over a week ago, the government notified coking coal as a critical and strategic material under the Mines and Minerals (Development and Regulation) Act. This was the first step to reduce import dependency. India has coking coal reserves of 38 billion tonnes but still imported 57 million tonnes in 2024-25. Of this, 29.6 million tonnes came from Australia followed by the US (8.45 mt) and Russia (5.26 mt). The US will clearly be looking to pressure India to cut back imports from Australia and Russia. The high-level committee on Viksit Bharat goals had recommended the coking coal notification, which now presumably will run aground.