Whalesbook
India Denies US Trade Deal Breakdown Narrative
India has sharply refuted claims by U.S. Commerce Secretary Howard Lutnick that a bilateral trade deal faltered because Prime Minister Narendra Modi did not engage with former U.S. President Donald Trump. The Ministry of External Affairs (MEA) labeled these assertions "inaccurate," highlighting that discussions between the two nations had progressed significantly.
MEA Spokesperson Randhir Jaiswal stated on Friday, January 9, 2026, that India and the U.S. were committed to a trade agreement as early as February 2025. He noted multiple negotiation rounds brought the parties "close to a deal" on several occasions, characterizing the reported remarks about a lack of presidential communication as a misrepresentation of the talks. Lutnick had reportedly suggested the deal stalled because Modi did not contact Trump, who he described as the "closer."
Energy Security and Tariffs
Jaiswal also defended India's strategy of purchasing Russian oil, emphasizing the necessity of securing affordable energy for its 1.4 billion citizens amid complex global market conditions. India is reportedly monitoring a proposed U.S. bill that could impose a substantial 500% tariff on oil buyers from Russia, including nations like India, China, and Brazil.
Market Impact and Investor Sentiment
The ongoing trade friction between India and the United States has cast a shadow over domestic financial markets. Indian equities commenced 2026 on a weak note, extending a losing streak to a fifth consecutive session. Market volatility is anticipated to persist, partly due to expected U.S. Supreme Court rulings on the legality of broad tariffs imposed under economic emergency powers.
Data from NSDL revealed that foreign portfolio investors (FPIs) divested nearly ₹12,000 crore from Indian equities during 2026. Despite these challenges, India reiterated its interest in finalizing a mutually beneficial trade agreement with the U.S., viewing the two economies as complementary.