Inside India Newsletter: President Trump’s poll setbacks and the US-India trade deal

Hello, this is Priyanka Salve writing from India.

Welcome to the latest edition of Inside India. A one-stop-shop for the stories and developments of the world’s fastest growing large economy.

After months of being burdened by soaring energy prices, trade uncertainty and an exodus of foreign investors, India had plenty of opportunities to celebrate this Diwali. Foreign investors returned to the market in November, and now a long-awaited US-India trade deal appears to be on the horizon.

Experts say the results of the U.S. midterm elections have brought the two countries closer to signing on the dotted line than before.

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The US-India trade deal, which has been fraught with uncertainty since February, is likely to receive a final push across the finish line thanks to President Donald Trump’s electoral setback in midterm polls.

Experts told CNBC that President Trump may lean toward closing some pending trade deals to promote them to the American public as a policy achievement, with a deal with New Delhi being the “frontrunner.”

He added that President Trump and Indian Prime Minister Narendra Modi are likely to sign a trade deal at the G20 summit in December, as negotiations are largely concluded.

U.S.-India trade negotiations are “very advanced and there appears to be a gentleman’s agreement between President Trump and Prime Minister Modi,” and a deal should be concluded when the two meet at Mar-a-Lago in December, Mark Linscott, a former assistant U.S. trade representative and senior adviser at the U.S.-India Strategic Partnership Forum, told CNBC.

President Trump has used tariffs as a pressure tactic to force trade deals with some countries, even as the approach has angered political opponents who say export taxes are adding to the burden on American households. The cost of living was a top concern for American voters in the midterm elections.

Ronak D. Desai, visiting fellow at Stanford University’s Hoover Institution, told CNBC: “The election was a cost-of-living verdict, and tariffs are now a liability that the president can’t defend with numbers.”

“Congress is not going to give him a comfortable victory, but a trade deal is something he can announce himself,” Desai said, adding that announcing a deal with India is “more likely than it was before the election.”

India’s Ministry of Commerce, Ministry of Foreign Affairs, and Office of the U.S. Trade Representative did not respond to CNBC’s requests for comment.

In response to a question about how the US midterm election results will reshape relations with New Delhi, India’s foreign ministry spokesperson said on Tuesday that relations between the two countries “have bipartisan support in the US”.

hard bargain

Although President Trump has maintained that Americans do not share in the burden of tariffs, the nonprofit Tax Foundation estimates that the tariffs will increase the average American household’s tax burden by $820 in 2026 and $1,000 in 2025.

As a result, Democrats are preparing to challenge President Trump’s signature tariff policies within days of taking control of both houses of Congress. Any current trade deal could be seen as a validation of President Trump’s tariff-driven approach to business.

“The president may be more committed to getting a deal done, seeing it as a policy outcome that he can promote to the American people,” Atman Trivedi, a partner at Washington-based DGA Albright Stonebridge Group, told CNBC. He said the Trump administration hopes to finalize an agreement with India before the G20 summit in December.

While U.S. voters are more affected by import tariffs on Canadian products, experts said a trade deal with India could soften criticism of tariffs as an effective bargaining chip.

President Trump announced a deal with India in February after the US agreed to cut tariffs to 18%, claiming that New Delhi had agreed to “buy American products” at a much higher rate. President Trump had previously imposed a 25% tariff on imports from India and an additional 25% tariff on products from New Delhi for the purchase of Russian crude oil.

But the deal has since been awaiting final approval, especially after the Supreme Court struck down President Trump’s tariffs and gave India leeway to request preferential tariffs that would give it an advantage over its competitors.

U.S. and Indian officials said in early October that negotiations had reached an impasse, but President Trump said on October 20 that the two countries were “very close” to a final deal. According to Indian media reports, the country’s Commerce Minister Piyush Goyal confirmed that discussions on the trade deal are almost “concluded”.

“We’ve been hearing for weeks that a deal is very close to being done,” Aryan Dorozario, associate fellow and chair of India and emerging Asian economies at the Center for Strategic and International Studies, told CNBC, adding that Modi’s visit to the G20 summit in December “would be the perfect setting to formalize the deal.”

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