U.S. trade representative Greer says deal with India not 'imminent' after Modi-Trump call

On Wednesday, Modi said his conversation with Trump was "productive," and the two leaders not only reviewed bilateral trade, defense, energy and critical technologies but also discussed "ongoing efforts to advance global peace and security."

While the Iran war has threatened India's energy security, pushing it to increase its reliance on Russian oil, the U.S. administration believes that New Delhi's purchase of Moscow's barrels is funding the Ukraine war.

The ties between the U.S. and India have been under strain for more than a year, and New Delhi faces fresh risk of Washington slapping up to 100% tariffs against it for continuing to buy Russian oil.

That could derail the trade talks, where India is seeking preferential tariffs from the U.S. that make its exports to Washington more competitive.

The U.S. had imposed a 25% punitive tariff on India last August for buying Russian oil, raising the duties on imports from New Delhi to 50%. In February, duties were reduced to 18%, with Trump claiming India had "agreed to stop buying Russian Oil, and to buy much more from the United States and, potentially, Venezuela."

New Delhi did not endorse those details shared by Trump, and it has maintained that ensuring energy security was the sole driver of its purchases.

Since the start of the year, the U.S. and Venezuela combined have become important to India's energy basket, but given the global supply constraints due to the Iran war, India cannot spurn supplies from Moscow.

"We may also be reaching the limits of trade complementarities between the two countries under current circumstances," Arpit Chaturvedi, South Asia advisor at strategic advisory firm Teneo, told CNBC.

Neither side at present appears able to accommodate the other, nor are they yet in a "position to simply agree to disagree and conclude the deal around those differences," he said.

Currently, Indian exports to the U.S. face a 10% tariff, following the conclusion of USTR's investigation into the acts, policies and practices of forced labor in 60 countries.

As per the Indian government, a substantial share of the country's exports to the U.S., such as generic pharmaceuticals and smartphones, remain outside the scope of the 10% duty.