India and US Trade Agreement Discussions
New Delhi: India and the US may unveil a temporary trade agreement by July 8, with New Delhi aiming for a complete exemption from a newly imposed 26% tariff on Indian products, according to officials.
On April 2, the US introduced this 26% tariff, but it was put on hold for 90 days, expiring on July 9. However, the baseline 10% tariff remains unchanged.
Indian officials mentioned that to safeguard certain sensitive sectors, they might consider implementing quotas or minimum import prices, particularly for agricultural and dairy products.
This week, Commerce and Industry Minister Piyush Goyal engaged in discussions with US Trade Representative Jamie Songlia and Secretary of Commerce Howard Rutnick.
“We’re actively working towards closing the interim agreement before the July 8 deadline. The discussions also cover a variety of areas, including goods, services, and digital trade. Our goal is to eliminate the 26% and 10% tariffs imposed on India,” Goyal stated.
The Trump administration is currently seeking Congress’s approval to lower tariffs below the Most-Favored-Nation rates. Nevertheless, they hold the authority to lift tariffs imposed on several countries, including India.
India may ask for specific commitments from the US regarding concessions in labor-intensive sectors in the initial phase of the proposed bilateral trade agreement (BTA). The aim is to double trade to $500 billion by 2030, with the first stage expected to be finalized by fall.
Ministerial meetings will lead to further discussions among key negotiators from both nations until May 22.
Officials in New Delhi and Washington are hoping to use the 90-day tariff pause to push forward their discussions. This tariff suspension was implemented to help address the growing trade deficit.
India is looking to negotiate mandatory concessions in the agreement for sectors like textiles, gems, clothing, plastics, chemicals, and shrimp.
Conversely, the US seeks mandatory concessions in areas such as industrial products, electric vehicles, wine, petrochemicals, dairy, apples, and genetically modified crops.
Currently, imports of genetically modified crops from the US face regulatory hurdles in India, though non-GM products like Alpha Alpha Hay are still imported.
The US has repeatedly raised concerns about non-tariff barriers affecting American goods in the Indian market.
When asked about the possibility of further discussions in this proposed agreement, authorities stated, “We’re aiming to resolve matters swiftly.” Since 2024, the US has been India’s largest trading partner, with bilateral trade reaching $131.84 billion. The US constitutes about 18% of India’s total exports and 6.22% of its imports.
Between 2024 and 2025, India saw a trade surplus of $41.8 billion with the US, with previous figures showing significant variations in surplus over the years, indicating concerns from the US regarding the expanding trade deficit.
