India may eventually be weaned off of Russian crude oil, which the Trump administration has frequently accused of funding Vladimir Putin's conflict in Ukraine, thanks to US sanctions on Rosneft and Lukoil. With the help of a potential tariff truce with China, Washington is still exerting pressure on New Delhi.
The White House may want access to its energy market before lowering its 50% import tax on the most populous country in the world. Meeting some demands will be quite simple. For example, according to Bloomberg News, India's state-owned refineries plan to purchase more liquefied petroleum gas from the US at the expense of Middle Eastern suppliers.

New Delhi is also willing to waive duty on US LPG sales in order to negotiate a trade agreement. The wealthiest businessman in Asia, Mukesh Ambani, might also buy more US ethane to produce petrochemicals and plastics, as I have previously argued.
However, when US negotiators attempt to force open the nation's strictly regulated bioenergy industry, things will become complicated. A significant portion of the corn farmed in the Midwest might be absorbed by India, which mixes 10 billion litres (2.6 billion gallons) of ethanol with petrol each year. (Corn is the primary source of bioethanol in the United States.) By 2050, this demand is predicted to double due to an increase in car ownership. The Americans are understandably upset that they have been denied such a significant opportunity.

The US trade representative stated in its 2025 report on foreign trade obstacles that "India forbids the importation of ethanol for fuel use, despite ambitious targets for blending ethanol with petrol."
Washington now has the upper hand in negotiations because of Trump's trade battle. The two major emerging economies with the highest tariff burden are Brazil and India, just as China and the US seem to be nearing an agreement on tit-for-tat port fees and rare-earth exports. Shrimp, diamonds, jewellery, clothing, home furnishings, and other labour-intensive Indian products have all but been excluded from their most significant international market.
New Delhi would prefer to reach a deal as soon as feasible and receive a reciprocal US tariff of 20% or less.

If not, Indian exporters run the danger of slipping farther behind their Southeast Asian competitors.
Prime Minister Narendra Modi, meanwhile, is hesitant to compromise on biofuels. For starters, the government's strict mixing regulations have angered drivers. While governments have told the public that any impact on performance is likely minimal and fixable, owners of older vehicles—which weren't built to handle an 80:20 blend of petrol and ethanol—are complaining about decreased engine efficiency and increased maintenance expenses.
The true pushback, however, will come from rural communities more than from drivers. One of the goals of the Indian biofuels initiative is to create an extra source of income for farmers in addition to reducing carbon emissions and the country's reliance on imported crude oil.

According to estimates, they have profited ₹1.18 trillion ($13.4 billion) from the sale of ethanol distillers, corn, rice straw, cotton stalk, bamboo, sugarcane juice, and molasses. Indian farmers would not want to give up their profits to competitors from outside now that they have experienced some degree of success as energy producers. Any trade agreement that ultimately reduces their earnings from selling excess sugar output and crop residue may be met with protests.
Modi has controlled Indian politics for over 11 years. With the exception of farmers, his economic policies and initiatives have not faced any opposition. Twice, they have compelled him to recall legislation.He wouldn't take the chance of a trade agreement with Trump that would put important northern Indian food-grain-growing states on the warpath once more, especially because state elections are scheduled for 2027.