US removed India from a list of countries that got duty-free access for more than $6 billion of imports.
US and Indian trade teams started negotiations today as tensions mount over protectionist measures taken by both sides.
While India and the United States have become increasingly close in recent years, US President Donald Trump took a swipe at India on Twitter this week, saying that its tariffs were "no longer acceptable".
The US removed India from a list of countries that got duty-free access for more than $6 billion of imports earlier this year. The move came on the back of higher US tariffs on Indian steel and aluminium.
In response, India imposed higher duties on 28 US products including almonds, apples and walnuts last month.
US Commerce Secretary Wilbur Ross earlier criticised India's trade policies and tariff rules, saying they posed a big impediment to attracting foreign investment.
As the sparring between the two sides heated up, Mr Trump and Prime Minister Narendra Modi ordered the talks when they met in Osaka, on the sidelines of June's G20 Summit.
Assistant US Trade Representative Christopher Wilson met Indian commerce industry officials in New Delhi today, ahead of a meeting with Commerce Minister Piyush Goyal, ministry sources said.
Foreign ministry spokesman Raveesh Kumar said on Thursday that all decisions in the talks would aim to keep relations "positive".
"We have to keep in mind the bigger picture and within that bigger picture try to address all the issues which are on the table," Mr Kumar told a briefing.
India-US trade was worth $142.1 billion in 2018 with the United States $24.2 billion in deficit. The US-India Strategic Partnership Forum has predicted trade will go up to $238 billion by 2025.