FORECAST NEGATIVE: US-India Deal Hopes Fade as Modi Weaponizes Market Access

WASHINGTON / NEW DELHI — The probability of a comprehensive U.S.-India Free Trade Agreement (FTA) being signed and ratified before the end of 2026 has collapsed, as New Delhi shifts from negotiation to active economic retaliation in response to American protectionism.

Following reports that Prime Minister Narendra Modi is mobilizing India’s "consumer power" against U.S. interests, the diplomatic window for a trade accord is effectively closed. Rather than capitulating to Washington’s demands to secure a deal, the Indian administration is weaponizing access to its 1.4 billion-person market to inflict economic pain on American exporters, signaling a prolonged stalemate that will almost certainly outlast the current market timeline.

The conflict stems from the Trump administration's "America First" pivot in mid-2025, which imposed a crushing 50% composite tariff on Indian goods—split between a reciprocal tax and penalties for India’s continued engagement with Russian energy and BRICS currency initiatives. While the initial U.S. goal was to pry open India’s protected agricultural and dairy sectors, the strategy has backfired.

Far from offering the concessions necessary to frame a Senate-ratifiable FTA, Indian negotiators have entrenched their positions. New Delhi is actively blocking market entry for U.S. agricultural products and technology firms—the very assets Washington needs to sell a deal to domestic constituents. Furthermore, a coordinated "Buy Indian" sentiment is rising among Modi’s political base, targeting major American consumer brands with boycotts.

Crucially for the 2026 timeline, India has begun decoupling its trade growth strategy from the United States. In a clear signal that it is not waiting for Washington, New Delhi accelerated and concluded negotiations with the United Kingdom, Oman, and New Zealand in late December 2025. These alternative alliances are explicitly designed to offset the 21% drop in exports to the U.S. caused by the tariffs.

With the Trump administration holding firm on levies and India denying the market access required for any U.S. trade bill, the legislative path to an agreement by December 2026 is obstructed. The relationship has shifted from pre-treaty negotiation to trade hostility, rendering the ratification of a bilateral deal improbable in the near term.