India-US deal hinges on targeted trades, not sweeping reforms: Koan Advisory

New Delhi: Legal and accounting market access will remain off the table, retail and e-commerce rules won’t be rewritten, but reinsurance recognition and proportionate digital-data rules could still anchor a “phase one” trade deal between India and the United States this year. 

That is the blunt assessment from Koan Advisory, whose new report sets out the few realistic swaps and the many entrenched positions shaping the talks.

The study, prepared with Economic Laws Practice, Chintan Research Foundation and Esya Centre, identifies where Washington will push for deeper market access in services and digital trade, and where New Delhi will counter with its own asks on mobility, procurement, predictability on unilateral measures, and targeted insurance and data-transfer reforms.

The report hints that a small, practical deal is possible if both sides stay realistic, but a big, sweeping agreement is off the table.

Professional services: Political economy blocks the US agenda

Legal services remain one of the sharpest points of divergence in the ongoing talks. 

The United States is expected to demand national treatment and the right for its law firms to establish a commercial presence in India, but New Delhi’s market continues to be largely closed. 

Under the Bar Council of India’s 2022 rules, clarified further in 2025, foreign lawyers are allowed to provide only limited advisory services under strict conditions, and the latest amendment introduced advance-notice and client-disclosure requirements that many overseas firms view as excessive and intrusive. 

India has made no WTO commitments to open this sector for commercial presence, so its current position does not breach any multilateral obligations. 

The real hurdle is political rather than legal. Both the Bar Council of India and state bar associations have repeatedly resisted even modest liberalisation, and attempts to shift regulatory control have met with strong opposition. 

Koan Advisory highlighted that any movement here during the current phase of negotiations is likely to be marginal and administrative, rather than the kind of structural opening the US is seeking.

Accounting services are governed by a similarly defensive approach. 

India bars foreign ownership in statutory audit partnerships and has kept its WTO commitments in this area “unbound” for commercial presence. 

The Institute of Chartered Accountants of India has consistently opposed foreign entry, although draft guidelines issued in June 2025 propose a formal framework for cross-border consulting networks. 

While this would regulate existing arrangements, it stops well short of liberalisation. By contrast, the United States imposes no federal restrictions on foreign investment in accounting, although state-level licensing rules can create their own complexities. 

Here again, Washington can point to an asymmetry, but New Delhi is unlikely to go beyond procedural changes that do not alter the underlying market structure.

Retail and e-commerce: Rules built to stay in place

In retail and e-commerce, India’s policy framework is designed to shield domestic players and will be difficult to shift in trade negotiations. 

With no GATS bindings in distribution services, India maintains a 51% FDI cap in multi-brand retail, subject to government approval, state-level opt-in, significant minimum investment obligations and a 30% local sourcing requirement. Single-brand retail is more open, but still subject to sourcing norms.

E-commerce marketplaces are permitted 100% FDI, but inventory-led models are prohibited, and platforms cannot hold stakes in sellers or influence pricing. 

These rules have been shaped by political pressure from trader groups, the objective of building domestic supply chains and the desire to limit the dominance of large platforms. 

While US negotiators will target these policies as barriers to market access, Koan’s assessment is that major changes are improbable. At most, India might provide greater regulatory clarity and consistency to reduce ad hoc enforcement, but it is unlikely to alter the fundamental architecture.

Financial services: Insurance and reinsurance offer room for compromise

In banking, India permits foreign banks to operate either as branches or subsidiaries, but applies licensing quotas and caps ownership at 74% in private banks and 20% in public sector banks. 

Expansion remains tightly controlled, and these restrictions are in line with India’s WTO commitments. Koan sees little chance of significant change in this area during the current phase of talks, given the strategic and regulatory sensitivities involved.

Insurance and reinsurance, however, present a more promising area for reciprocal concessions. 

India has gradually raised the FDI limit in insurance from 26% to 74%, with a move toward 100% ownership announced in 2025. Nevertheless, operational frictions persist, including the ordering of reinsurance contracts and potential collateral requirements for cross-border reinsurers. 

The US framework, which recognises “covered agreements” and “reciprocal jurisdictions,” could be adapted to create mutual recognition of prudential regimes. 

This would allow Indian reinsurers to operate in the US without additional capital burdens, while giving American reinsurers smoother entry into the Indian market. Koan identifies this as one of the most realistic and mutually beneficial outcomes for a phase one deal.

Audiovisual and broadcasting: Limited to procedural improvements

India’s broadcasting and audiovisual sectors remain heavily regulated, with foreign ownership caps of 26% in newspapers and digital news and 49% in FM radio. 

Additional constraints include preferences in satellite capacity procurement, uplinking and downlinking conditions, and the Telecom Regulatory Authority of India’s controls on pricing and bundling. The US, while having fewer content controls, requires Federal Communications Commission approval for foreign ownership above certain thresholds and applies public-interest and national-security considerations.

US complaints about delays and inconsistencies in Central Board of Film Certification approvals are long-standing. 

Koan believes that any progress here is likely to be confined to procedural improvements, such as streamlining certification, facilitating co-productions and enforcing clearer timelines. 

The structural elements of India’s broadcasting policy, particularly TRAI’s pricing controls, are unlikely to be altered in a trade agreement.

Digital trade: Narrowing the gap without removing it

The digital trade chapter is among the most contentious, but also one where a path to compromise exists. 

The US typically seeks provisions that prohibit data localisation and guarantee unrestricted cross-border data flows, with only narrow security or privacy exceptions. 

India’s position is more restrictive: the Reserve Bank of India mandates local storage for payments data, the Digital Personal Data Protection Act operates on a negative list of restricted jurisdictions, and draft rules propose stricter requirements for “significant data fiduciaries” and broad government powers over outbound transfers. 

Koan warned that measures that are too broad or poorly justified risk being seen as trade barriers unless they are clearly necessary and proportionate.

A recent shift in US policy has created some room for alignment. 

In April 2025, Washington introduced outbound data-flow controls for “countries of concern,” adopting an approach that, while narrower, moves closer to India’s negative list. 

Koan suggested that both sides could agree on a framework built around necessity-tested exceptions, a more precise negative list, and contract-based transfer tools such as standard contractual clauses and binding corporate rules. 

Rather than seeking identical privacy laws, the two countries could commit to recognising equivalent outcomes. 

Packaging these elements into a modular digital trade chapter could allow for early gains without forcing either side into politically unacceptable concessions.

India’s demands from the US: Mobility, procurement and predictability

Koan’s report also turns the spotlight on barriers faced by Indian businesses in the US, framing them as potential bargaining chips. 

The long-standing issue of temporary work visas, particularly H-1B and L-1 categories, continues to be the most significant concern for India’s IT and knowledge services sectors. New Delhi will push for more predictable and less restrictive access, even if hard quotas are not on the table.

Public procurement remains another priority, as “Buy American” provisions limit Indian participation at both federal and state levels. 

India will also seek clearer and more predictable export control processes for sensitive technologies, the conclusion of a social security totalisation agreement to prevent double contributions by Indian workers, and safeguards against sudden unilateral measures under Sections 232 and 301 of US trade law. 

While few of these objectives will be easy to achieve, Koan sees scope for incremental progress in specific procurement programmes, procedural mobility facilitation, and structured consultation mechanisms to manage unilateral actions.

What a realistic deal looks like

According to Koan, the most achievable phase one package would combine reciprocal recognition in reinsurance, proportionate digital data-transfer rules, and procedural improvements in the audiovisual sector with incremental gains in procurement, export controls and mobility. 

Structural reforms in legal, accounting, retail, e-commerce and banking are considered unlikely in the current political environment.

For both governments, the challenge will be to focus on what is deliverable within the political and technical constraints, rather than pursuing headline-grabbing objectives that are unlikely to be met. 

The US will aim to open markets where India remains closed, while India will push for more certainty and access in the US. The report’s conclusion is direct: successful trade deals of this kind are built on narrow, balanced exchanges, and both sides will need to resist the temptation to let ideological positions overtake practical outcomes.