The key facts

  • Rubio: US–India trade deal 'very close', only 'a small number of points' remain
  • India, according to Rubio, has made substantial progress in diversifying oil purchases
  • India's Finance Ministry earlier said talks had reached a 'plateau'

Visit to Mumbai and talks

US Secretary of State Marco Rubio arrived in Mumbai on Tuesday for a three-day visit — his second official trip to India this year (in May he met with Prime Minister Narendra Modi). This time no meeting with Modi is scheduled; Rubio held talks with India's Foreign Minister Subrahmanyam Jaishankar and will meet with business representatives. According to Rubio, the sides discussed energy security and defense cooperation, affirming the importance of the strategic partnership.

Assessments of progress on the deal

Rubio said India has made 'substantial progress' in diversifying oil supplies: 'India has repeatedly expressed a desire to diversify its energy portfolio, and that is sensible. Doing so in one day is not easy, so I think they have made substantial progress on this.' On the trade agreement he said: 'We are very, very close; I would say we are as close as one can be without a signed agreement. A small number of points remain,' adding that he hopes for 'good news' in the near future and that leaders will then be able to sign it.

Context of the talks and contradictions in assessments

The countries reached an interim trade agreement in February aimed at reducing US tariffs on Indian goods, but shortly afterward the US Supreme Court struck down Trump's sweeping tariffs, creating uncertainty about when the agreement would take effect; talks have continued since then. India's Finance Minister Nirmala Sitharaman said earlier this month that the negotiations had reached a 'plateau beyond which giving or taking will be very, very difficult.' Rubio on Tuesday expressed a more optimistic position.

Tariffs, oil and the economy

India fears US trade measures, including a law allowing tariffs of up to 100% for countries buying Russian oil, although last week Trump signed an order waiving those sanctions. India is a major importer of Russian oil, and the tariff war launched by Trump in April of last year has heightened friction between Washington and New Delhi. Rubio will also visit Jamnagar in Gujarat — a port and hub base of billionaire Mukesh Ambani's Reliance conglomerate, home to the world's largest refinery. 'India is a refining superpower,' he said, adding that the US 'could be a source of some of their energy resources.' Washington wants India to buy more American energy; agriculture remains a sensitive issue for India, which does not want to expose its farmers to foreign competition. India's merchandise exports to the US in August rose 21% to $8.3 billion compared with the same month a year earlier, when 50% tariffs were in effect. Economists warn that a return of high tariffs would cloud India's growth forecasts, weaken market sentiment and increase pressure on the weakening rupee.