India-US trade relations remain uncertain following the passage of the Graham Bill by the US Congress and its subsequent approval by the US President, the Finance Ministry said in its September Monthly Economic Review.
The Lindsey O Graham Sanctioning Russia and Iran Act of 2026 seeks to increase pressure on countries purchasing oil from Russia and Iran by allowing the US administration to impose tariffs of up to 100% on countries buying Russian crude.
US trade uncertainty poses investment challenge
The Finance Ministry said the legislation comes at a time when global investment flows are being influenced by several competing factors. The artificial intelligence investment boom continues to drive capital expenditure and cross-border flows, with no significant signs of a slowdown, it said.
At the same time, developed economies are competing to attract investment to support renewed manufacturing expansion, while global supply chains face increasing geopolitical pressures.
For India and other developing economies, this creates a more difficult environment for attracting foreign capital, the ministry said. It nevertheless expects net foreign direct investment into India to perform better during the current financial year than in the previous year.
The ministry also cautioned that Indian financial assets, including the rupee, could face short-term pressure amid continuing geopolitical and economic uncertainty.
It said India could not rely solely on the growth achieved after the Covid pandemic and would need to sustain economic performance through continued policy efforts.
India continues talks with US on trade agreement
The Graham legislation has particular significance for India because the country continues to purchase Russian crude.
The Finance Ministry’s assessment came as Commerce and Industry Minister Piyush Goyal met US Trade Representative Jamieson Greer on the sidelines of the G20 Trade Ministers' Meeting in Milwaukee.
The two sides discussed efforts to conclude an interim trade agreement under the proposed India-US Bilateral Trade Agreement.
Goyal described the meeting as productive and said both sides were working towards an early conclusion of a mutually beneficial interim agreement. They also exchanged views on issues being discussed under the G20 framework during the US presidency.
The latest discussions come as India seeks to manage trade and investment uncertainty while maintaining energy security and attracting foreign capital.
