India Aims to Hasten Mini Trade Agreement to Outrun Mutual Tariffs

India Seeks Mini Trade Agreement with the US Before July 8 to Mitigate Tariffs

India is actively pursuing a mini trade agreement with the United States prior to July 8 to avoid the implementation of full reciprocal tariffs. Under the leadership of Commerce Minister Piyush Goyal, discussions aim to secure greater market access and duty relief as part of the upcoming interim Bilateral Trade Agreement (BTA). Key industries targeted include textiles, electric vehicles (EVs), dairy, and agriculture.

The BTA stands out as India’s most crucial trade negotiation, given that the US is its largest trading partner. In a bid to expedite the process, Minister Goyal held discussions with US Commerce Secretary Howard Lutnick in Washington late on Monday. Their meeting sought to provide a “political steer” to the ongoing negotiations, potentially exploring options to finalize a “mini deal” before the autumn deadline for the interim trade agreement.

Aim to Avoid Reciprocal Tariffs

The proposed mini deal is pivotal in helping India dodge the full scale of reciprocal tariffs set to kick in on July 8. To successfully navigate this, an agreement on the mini deal must be reached before that date. Currently, India faces a temporary 26% interim tariff, but its 90-day suspension means Indian exports are only incurring an additional 10% duties.

Following the meeting, Minister Goyal shared on ‘X’ social media platform, “Positive discussions with Secretary Lutnick on expediting the first phase of the India-US Bilateral Trade Agreement.” Goyal is also expected to confer with US Trade Representative Jamieson Greer during his visit. This mini agreement and subsequent interim deal will set the stage for a three-part process leading to a comprehensive trade pact between India and the US.

Intensive Negotiations Underway

After Goyal’s meetings, negotiators have commenced detailed discussions concerning the interim BTA. The core team will be meeting over the span of four days, from May 9 to May 22. The Indian delegation, which includes Goyal and chief negotiator Rajesh Agrawal from the Department of Commerce, will be present in the US for the entire week. They will address topics such as market access, rules of origin, and non-tariff barriers.

Officials indicate that the focus of the mini deal prior to the interim BTA will largely center around enhancing market access for goods. Additionally, India’s recent notice to the World Trade Organization (WTO), which asserts its right to impose retaliatory duties on certain US goods in response to US tariffs on steel and aluminum, will be a significant aspect of the BTA negotiations.

Previous Discussions and Future Prospects

Last month, a team of Indian officials led by Agrawal also visited Washington, engaging in three days of meetings with Assistant US Trade Representative for South and Central Asia, Brendan Lynch. The BTA negotiations are deemed critical for India, especially following the successful conclusion of the Free Trade Agreement (FTA) with the UK earlier this month. Similar negotiations with the European Union (EU), Oman, Australia, and several other nations are also approaching their final stages.

In its effort to bolster exports through the BTA, India is seeking tariff concessions for labor-intensive sectors, including textiles, gems and jewelry, leather goods, garments, plastics, chemicals, shrimp, oilseeds, grapes, and bananas in its discussions with the US. Conversely, the US is advocating for duty concessions in areas such as specific industrial items, automobiles (notably electric vehicles), wines, petrochemicals, and agricultural products like apples and tree nuts.