India and US Seeking Trade Agreement
New Delhi: India and the US are expected to announce a temporary trade agreement by July 8, with Indian officials pushing for a complete exemption from a newly imposed 26% tariff on local goods.
On April 2, the US introduced a 26% mutual tariff on Indian goods, which has been paused for 90 days until July 9. However, the 10% baseline tariff remains unchanged.
Government officials mentioned that India’s strategy to protect its specific sectors might include certain quotas or minimum import prices, particularly focusing on agriculture and dairy.
This week, Commerce and Industry Minister Piyush Goyal engaged in trade discussions, meeting with US Trade Representative Jamie Songlia and US Secretary of Commerce Howard Rutnick.
“The negotiations are ongoing. We’re aiming to wrap up the interim deal by July 8, covering various aspects, including goods, voluntary barriers, and digital services. Our objective is to eliminate the 26% and 10% tariffs for India,” Goyal noted.
Currently, the Trump administration is seeking congressional approval to lower the tariffs below the Most-Favored Nation (MFN) rates, although it has the authority to remove the tariffs on several countries, India included.
India might request specific commitments from the US concerning concessions in labor-intensive sectors in the initial phase of the proposed bilateral trade agreement. The aim is to increase bilateral trade to $500 billion by 2030, hoping to finalize the initial agreement by fall.
Ministerial meetings will continue discussions with key negotiators from both nations until May 22.
Officials are looking to utilize the 90-day tariff suspension to further negotiations. The suspension of the 26% tariffs was announced to address the growing trade deficit between the countries.
To enhance bilateral trade, India is advocating for concessions in labor-intensive industries like textiles, gems, apparel, plastics, chemicals, and certain food products.
Conversely, the US is requesting concessions in sectors such as specific industrial products, electric vehicles, wine, petrochemicals, and dairy goods.
Despite India’s regulations, imports of genetically modified (GM) crops from the US remain problematic, although non-GM products like Alfalfa Hay are imported.
Multiple concerns have been raised by the US regarding non-tariff barriers affecting American goods in the Indian market.
When asked about future consultations for the agreement, authorities responded, “We are trying to resolve matters swiftly.” The US has been India’s largest trading partner for the fourth consecutive year, with bilateral trade reaching approximately $131.84 billion. The US comprises about 18% of India’s overall goods exports and 6.22% of imports.
From 2024 to 2025, India enjoyed a trade surplus of $41.8 billion with the US. In past years, the surplus fluctuated, indicating growing concerns from the US about the increasing trade deficit.
