India-US Trade Talks: Interim Deal, Section 301 Probes and the New US Russia Sanctions Law
India and the US are expected to focus on the Bilateral Trade Agreement (BTA) and an interim deal when the Union Commerce Minister meets the US Trade Representative (USTR) on the sidelines of the G20 Trade Ministers' Meeting in Milwaukee (30 September to 1 October 2026).
The February 2026 Joint Statement set a framework: India would remove or cut tariffs on all US industrial goods and many US food and farm products, and the US would apply an 18% reciprocal tariff on Indian goods.
At that time, Indian goods faced tariffs of up to 50%: a 25% reciprocal tariff plus an extra 25% linked to Russian oil purchases. The extra 25% was later rolled back.
On 20 February 2026, the US Supreme Court struck down the reciprocal tariffs that had been imposed under the International Emergency Economic Powers Act (IEEPA). Since then, the US has used other tools, including two Section 301 investigations: one on structural excess capacity in manufacturing and one on goods made with forced labour.
The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed into law on 18 September 2026, allows US tariffs of up to 100% on certain major buyers of Russian oil and gas, subject to exceptions in the law.
The Ministry of External Affairs has said measures such as these sanctions could affect bilateral relations and the global energy market.
India-US Bilateral Trade Agreement (BTA)
The India-US Bilateral Trade Agreement (BTA) is a trade deal being negotiated between India and the United States. It aims to cut tariffs (import taxes) and other barriers on goods traded between the two countries. The two sides are first working on an interim deal, a smaller first-stage agreement, while talks on the full BTA continue. The US is India's largest export market for goods.
The upcoming meeting is meant to take stock of pending issues and move towards the interim arrangement. The shifting US tariff tools, from IEEPA to Section 301 and the new sanctions law, make it harder to fix the final tariff India will face.
Section 301 of the US Trade Act, 1974
Section 301 is a part of a US law, the Trade Act of 1974, that lets the United States act against another country's trade practices that it considers unfair. The US Trade Representative (USTR) runs the investigation. If the USTR finds a practice "unreasonable" or "discriminatory" and harmful to US business, it can impose extra tariffs or other penalties. Unlike IEEPA, Section 301 was written by Congress specifically for trade, which is why the US now relies on it more.
The 10% forced labour duty and the pending excess capacity probe are now among the main US tariff tools affecting India. There are indications that the US may cap such tariffs for India as part of a deal, so the Section 301 outcome matters for the interim agreement.
Economic Sanctions: Primary vs Secondary Sanctions
Economic sanctions are penalties that a country places on another country, company or person to change their behaviour, without using military force. Primary sanctions stop the sanctioning country's own citizens and companies from dealing with the target. Secondary sanctions go further: they punish people and companies from other countries if they keep dealing with the target. So a third country like India can be affected even though the dispute is between the US and Russia.
India is among the largest buyers of Russian oil, so the new US law has added uncertainty to the trade talks. The Ministry of External Affairs has warned that such measures could affect bilateral ties and the global energy market.
- Meeting venue: sidelines of the G20 Trade Ministers' Meeting, Milwaukee, Wisconsin, 30 September to 1 October 2026
- Visit dates: 29 September to 5 October 2026
- February 2026 framework: 18% US reciprocal tariff on Indian goods
- Earlier peak tariff on Indian goods: up to 50% (25% reciprocal + 25% Russian oil-linked)
- US Supreme Court ruling against IEEPA tariffs: 20 February 2026 (Learning Resources, Inc. v. Trump, 6-3)
- Section 301 excess capacity probe: began 11 March 2026, covers 16 economies including India
- Section 301 forced labour duty on India: 10%, from 24 July 2026
- Lindsey O. Graham Sanctioning Russia and Iran Act of 2026: signed 18 September 2026; tariffs of up to 100% on major buyers of Russian oil and gas
- At the G20, India will argue for a rules-based, non-discriminatory multilateral trading system with the WTO at its core