Trade talks need different templates for different partners, says FM Sitharaman

NEW DELHI: India cannot use a single template for trade negotiations with major economies as tariffs, geopolitical risks and supply-chain concerns increasingly reshape the global trading system, finance minister Nirmala Sitharaman said on Monday.

Speaking at the Munich Leaders’ Meeting in New Delhi, Sitharaman said India’s recently concluded negotiations with the European Union (EU) should not automatically serve as a model for its ongoing talks with the US. The India-US agreement is yet to be finalized and remains under “hard and very vigorously negotiated” talks, she said.

“The templates can exist for different countries in different parts of the world,” Sitharaman said, pointing to differences in India’s trade relationships. In the case of the US, she noted that the trade balance is “very much in our favour,” giving Washington a different negotiating priority.

Bilateral trade between India and the US rose to $140.77 billion in fiscal year 2026 (FY26) from $132.14 billion in FY25, according to data from the Directorate General of Foreign Trade (DGFT). India’s exports to the US edged up to $87.31 billion from $86.51 billion, while imports rose to $53.45 billion from $45.63 billion. As a result, India’s trade surplus with the US narrowed to $33.86 billion from $40.89 billion.

India and the US began negotiations for a bilateral trade agreement in February 2025, when Prime Minister Narendra Modi and President Donald Trump formally announced the talks. The agreement has yet to be concluded.

Different deals, different stakes

Sitharaman said the India-EU negotiations had to account for sensitive sectors on both sides, including agriculture, dairy, meat, and soybean. The talks also had to address supply-chain resilience, including the need to find new partners where existing supply chains have already been disrupted.

The contrast with China is sharper. The minister said India’s trade deficit with China has grown sharply since 2014 and that countries are increasingly seeking to address trade imbalances through means other than traditional negotiations, with tariffs becoming “weaponized” in the process.

India cannot simply replicate such approaches with China and would instead have to rely on negotiation and give-and-take, she said.

The comments underscore how India is negotiating multiple trade arrangements at a time when tariff concessions are only one part of the equation. Supply-chain resilience, strategic autonomy and geopolitical risks are increasingly shaping the terms of trade policy.

Sitharaman also argued that bilateral and multilateral trade arrangements have never been mutually exclusive. But the balance has shifted towards bilateral agreements as institutions meant to guide and regulate the multilateral system have weakened.

“Multilateralism is not going to go away, and multilateralism shouldn’t go away,” Sitharaman said, while adding that the weakening of institutions such as the WTO has made countries more confident about pursuing bilateral arrangements.

The remarks come as India works simultaneously on trade arrangements with several partners, including the US and Canada.

The Munich Leaders Meetings are part of the Munich Security Conference (MSC), established in 1963 for high-level security dialogue. The 4–5 October New Delhi meeting, in cooperation with the Indian government, has focused on economic security, resilient supply chains, strategic autonomy and the changing role of emerging and middle powers.

A new investment template

Sitharaman said India is also moving towards a new template for bilateral investment protection agreements. The framework, incorporating lessons from recent agreements with countries including the United Arab Emirates, Oman and Saudi Arabia, is expected to receive cabinet approval shortly.

Mint reported on 25 September that the Union cabinet would shortly consider overhauling the decade-old bilateral investment treaty (BIT) template to make it easier for foreign companies to seek international arbitration over investment disputes in India.

Negotiations are already underway with Canada and several other countries based on elements of the proposed framework, Sitharaman said. India hopes to conclude bilateral investment protection agreements with at least three more countries by December, while a pact with Canada could be concluded by December or early next year if negotiations progress as planned.

The broader message from the discussion was that India is increasingly viewing trade policy through the lens of economic security. European participants at the meeting similarly argued that India and Europe have a shared interest in diversifying supply chains, reducing external dependencies and building strategic autonomy.

Sitharaman described the India-EU agreement as the “mother of all deals”, underlining the scale of the two economies and the strategic importance of the partnership.

About the Author

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.

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