Uncertainty surrounding the timing of an India-US trade deal has grown significantly, with fund managers indicating that expectations for a near-term agreement have substantially weakened. Industry experts suggest that even prolonged delays or sudden announcements may not materially impact Indian equity markets, as investors are advised to focus on long-term fundamentals rather than trade-related developments.

Supreme Court Delays Create Tariff Uncertainty

The US Supreme Court did not issue a ruling on Friday regarding the legality of Trump's broad tariff regime, extending uncertainty over whether existing tariffs will remain in place or face potential legal challenges. This delay has created additional complexity for trade relations between the two nations.

Meanwhile, legislation currently under discussion in the US includes provisions for punitive tariffs reaching up to 500%, which could severely impact India's export sector if enacted. The combination of legal uncertainty and potential new tariff measures has created a challenging environment for trade negotiations.

Fund Manager Perspectives on Deal Timeline

Speaking at the CFA Society's India Investment Conference on Friday, WhiteOak Capital's Prashant Khemka expressed diminished optimism about deal prospects. He noted being hopeful "till a couple of months ago, based on all the comments and these things," but acknowledged that the probability of concluding a deal soon appears to be declining.

Khemka highlighted the legal uncertainty surrounding US tariffs, noting that the Supreme Court "seems extremely apprehensive about overreach" and that some tariffs could face legal challenges. He cautioned that even if tariffs are rolled back or moderated, markets should not assume automatic positive reactions given broader macroeconomic and liquidity factors.

Limited Market Impact Expected

Fund managers emphasized that Indian markets have treated tariff developments with limited reaction thus far. The consensus among industry experts suggests that trade tensions may not significantly affect equity performance, given India's relatively small export exposure to the US.

Carenlian Capital's Vikas Khemani stressed the importance of company-specific analysis over sector-wide concerns. "In every sector that we don't like, there are companies that we like, and vice versa. You have to drill down to a company-specific basis," he explained.

Khemani also highlighted the limited macroeconomic impact, pointing out that "US exports are less than 2% of GDP. India grows that much in a quarter." This perspective suggests that trade tensions may have minimal overall economic impact on India's growth trajectory.

Structural Shifts Beyond Tariffs

HDFC AMC's Chirag Setalvad emphasized that current challenges extend beyond tariff issues, representing a broader structural shift in global economics. "This is not about tariffs," he stated, adding that "the bigger trend is for countries to now look out for themselves. America looks out for itself, Europe looks out for itself. We are no longer in globalisation."

Setalvad suggested that even resolution of tariff issues would not restore previous global cooperation levels, noting that new concerns would likely emerge to replace current trade tensions.

Investment Strategy Recommendations

Despite ongoing uncertainty, fund managers urged investors to maintain focus on long-term fundamentals rather than reacting to trade negotiations or tariff headlines. Khemka advised systematic investment approaches with long-term horizons, suggesting investors "take advantage" during crisis periods.

The experts noted that significant market corrections typically occur only during widespread economic damage scenarios. "Markets generally go down very sharply when there's a widespread bankruptcy risk," Khemka observed, suggesting current trade tensions may not reach such severe levels.

While acknowledging sector-specific pressures, particularly in textiles, fund managers maintained that selective opportunities exist across various industries through careful company-level analysis and fundamental research.

The India-US trade agreement remains stalled due to unresolved tariff disputes rather than diplomatic communication issues, according to Mark Linscott, former Assistant US Trade Representative. His assessment directly counters recent claims by US Commerce Secretary Howard Lutnick, who suggested the deal failed because Prime Minister Modi did not personally call President Trump to finalize it.

Expert Analysis Challenges Communication Narrative

Linscott emphasized that focusing on phone calls misrepresents the real challenges in negotiations. Speaking to CNBC-TV18, he acknowledged Trump's decisive role in closing trade agreements but stressed that substantive discussions between India and the US had advanced significantly through official channels over several months.

"I think where we still have a big gap, and what is holding up more progress, is what the reciprocal tariff rate will be," Linscott stated. He noted that India seeks clarity on whether tariffs would align with levels granted to the European Union.

Political Response and Historical Context

Lutnick's podcast comments triggered sharp reactions in New Delhi, with India's External Affairs Ministry rejecting his characterization and confirming that Modi and Trump had spoken eight times in 2025, including discussions on trade matters.

Former Indian Ambassador to the US Arun Singh described Lutnick's claims as reflecting long-standing perception differences between Washington and New Delhi. He argued that negotiations originally shaped up as balanced agreements with mutual concessions, but this approach lost favor as Trump sought to project unilateral wins domestically.

Escalating Demands and Negotiation Challenges

International trade policy expert Abhijit Das presented a more pessimistic outlook, suggesting US demands from India continue rising regardless of concessions already offered. He argued that India weakened its negotiating position by offering concessions before formal talks commenced, including budget measures to ease trade frictions.

"Whatever we put on the table, even if it's the best offer from the Indian side, does not seem to meet the expectations of President Trump," Das explained, expressing doubt about achieving a genuinely balanced outcome.

Optimistic Outlook Despite Challenges

Despite these concerns, Linscott maintained optimism about reaching an agreement. He downplayed suggestions that the US seeks sweeping additional concessions in sensitive sectors like agriculture and dairy in a first-phase deal, arguing that broad agreement contours are already established.

"I'm bullish, and I still am quite hopeful that this can be done relatively soon," Linscott stated, reiterating that tariffs remain the central unresolved issue.

Legal and Policy Uncertainties

The situation faces additional complexity from legal challenges to Trump-era tariffs in the US Supreme Court. While a verdict could potentially eliminate some levies, experts noted the administration has alternative legal routes to reimpose tariffs under different trade laws, creating continued uncertainty for Indian exporters.

The expert assessments collectively suggest the India-US trade deal represents less a failure of personal diplomacy and more a reflection of complex tariff negotiations and domestic political considerations in Washington.