Why India’s Big-Ticket Trade Deals Keep Missing Deadlines—and What It Signals

By R. Suryamurthy

India’s trade calendar is entering another make-or-break week, but the diplomacy behind it is still weighed down by a decade of defensive policymaking. The arrival of Deputy U.S. Ambassador for Trade Rick Switzer on December 10–11 is meant to give fresh momentum to the long-pending Bilateral Trade Agreement (BTA).

Instead, it is exposing how deeply India’s negotiations with Washington—and with Brussels, London and others—have been slowed by accumulated mistrust, tariff battles and an investment regime many partners still view as unpredictable.

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The Ministry of External Affairs called Switzer’s trip a “familiarisation visit,” but in reality it is an attempt to rescue a process that has repeatedly slipped off schedule. Commerce Secretary Sunil Agarwal told an industry gathering last month that the agreement could still be wrapped up within this calendar year.

Few negotiators share that optimism. Each fresh round is forced to revisit an expanding list of disputes: from tariff swings triggered by U.S. domestic politics to India’s complaints about aggressive American actions on steel, aluminium and, more recently, the 2021 tariffs linked to Russian oil imports.

Those tariffs—imposed first at 25% and later doubled—were framed by Washington as a necessary correction to restore competitive balance. India saw them as political pressure dressed up as trade policy. Both sides avoided escalation, but the mistrust lingers. The BTA was designed as a limited, manageable first phase. Instead it has become yet another forum for airing old grievances.

Switzer’s visit overlaps with India’s accelerated push on the European front, where Commerce Minister Piyush Goyal met EU Commissioner for Trade Maroš Šefčovič after a dense week of technical talks in New Delhi. Publicly, both sides hailed “steady progress.”

Privately, officials admit they remain far apart on rules of origin, tariff timelines, sustainability clauses and services mobility—issues that have stalled the agreement for nearly a decade.

The pattern is now familiar across negotiations: political warmth on the surface, policy stalemate underneath.

What makes the current cycle more complicated is that India’s difficulty in closing trade deals is no longer just about tariffs or sectoral resistance. It is about the credibility deficit created by years of uncertainty in its investment regime.

Between 2013 and 2019, India terminated 44 bilateral investment treaties after a series of embarrassing arbitration losses to Vodafone, Cairn Energy and others. The decision may have reduced legal exposure, but it also triggered real economic consequences.

Research by the government-affiliated RIS shows that FDI inflows from countries whose treaties were terminated dropped by over 30%, with investors funnelling money through Singapore, Mauritius and other treaty-friendly hubs.

India still attracts respectable volumes—more than $50 billion in equity inflows in the first nine months of FY25—but the composition tells its own story: major partners negotiating FTAs are not investing directly at the levels expected of strategic allies.

For Washington and Brussels, this matters. Both prefer FTAs that integrate investment protection with market access. India insists the two must be decoupled, offering cooperation frameworks rather than enforceable guarantees.

That divergence has become a structural obstacle. To the U.S. and EU, India’s 2016 Model BIT—with its narrow definitions, lack of MFN, and a five-year domestic litigation requirement before arbitration—signals unresolved uncertainty. To India, those protections are non-negotiable tools to preserve policy space.

The result: both sides believe they are acting reasonably; neither feels the other is.

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This mismatch is clearest in the U.S. negotiations. Washington wants predictability in digital trade, intellectual property, tariff schedules and dispute settlement. India prioritises regulatory autonomy, data sovereignty and the ability to adjust duties in response to economic shifts. Each claims to be defending legitimate policy space. Each sees the other as inflexible.

With the EU, the hurdles come from a different direction. Brussels wants binding sustainability and labour provisions and stricter rules of origin. India says it supports these in principle, but resists enforceability. Again, both sides say they want an ambitious agreement. Again, politically, neither side can be seen conceding too much.

Meanwhile, India’s own negotiation bandwidth is being stretched thin. With 14 FTAs already signed and six PTAs in place, New Delhi is negotiating simultaneously with the EU, U.S., U.K., Canada, the GCC and others. The overlapping commitments complicate bargaining positions and create internal contradictions that partners immediately exploit. The absence of a stable investment template compounds that fragility.

What is missing, increasingly, is strategic coherence. India’s trade partners want clearer signals that market access will be backed by dependable legal frameworks. India wants assurance that its regulatory authority will not be second-guessed. A middle ground exists, but Delhi’s current mix of defensive investment provisions and assertive tariff management makes compromise harder than it needs to be.

The irony is that India’s own economic ambitions depend on resolving this tension. Targets like $500 billion in India-U.S. trade by 2030 or a meaningful jump in manufacturing FDI cannot rest on optimistic diplomatic statements alone. They require legal and policy predictability—something New Delhi has not consistently delivered since the mass BIT terminations.

Switzer’s meetings this week may help thaw atmospherics, but the structural issues that keep resetting negotiations will not disappear without policy recalibration. India must decide whether its investment posture should continue signalling maximum caution or shift toward limited, clearly defined protections that restore confidence without returning to old vulnerabilities.

For now, the trade talks continue, the rhetoric remains warm, and the timelines keep drifting. India’s negotiating table is fuller than ever, but the outcomes are scarcer. The cost of past policy overcorrection is becoming clearer in each stalled round, each delayed closure.

Whether New Delhi can untangle that legacy—and realign its trade and investment strategy with its global economic aspirations—will determine whether this week marks a turning point or just another reset in a long, looping negotiation cycle. 

This report is from 5Wh news service. NewsGram holds no responsibility for its content. 

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