India-US trade talks stall pending US excess-capacity probe

Negotiations for a comprehensive India-U.S. bilateral trade agreement are stalled, with significant progress unlikely until Washington concludes a major investigation into alleged structural excess capacity in key Indian industries, according to sources familiar with the matter. This development follows the recent imposition of new U.S. tariffs on Indian goods under a separate forced labor trade regime.

The United States announced a new 10 percent tariff on a portion of Indian imports last week, a measure targeting countries it claims lack adequate domestic prohibitions on goods produced with forced labor. Indian officials have contested the legal basis of this determination, arguing their domestic labor standards meet international thresholds. According to the Indian government's calculations, approximately 45 percent of its exports to the U.S. fall under exempted categories, including generic pharmaceuticals, smartphones, steel, aluminum, and auto parts, leaving the remaining 55 percent subject to the new duty.

Despite this tariff action, the Indian government has stated its commitment to continuing negotiations. Officials described recent talks, including a visit by a U.S....