Interim Deal with US Likely to Include Digital Services
India and the US Target July 8 for Interim Trade Agreement
India and the United States are working towards finalizing an interim trade agreement by July 8, which will encompass digital services, goods, and tariff-related matters. India is advocating for protections for its agricultural sector and reductions in duties for vital exports. Meanwhile, the US is requesting concessions pertaining to industrial and agricultural products. A comprehensive trade pact is anticipated by the autumn.
To facilitate this agreement, Indian Commerce and Industry Minister Piyush Goyal is currently in Washington engaging in discussions with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer. A senior official mentioned on Wednesday that India intends to secure adequate protections for its vulnerable agricultural sector and aims to completely eliminate reciprocal tariffs within the interim trade arrangement. “Negotiations are progressing positively. We are aiming to finalize an interim deal before July 8, which will encompass goods, non-tariff barriers, and select areas of services, such as digital services,” the official stated.
Efforts to Expedite Trade Deal
In an effort to expedite the mini trade deal to avoid reciprocal tariffs, the Indian government is exploring protective measures for its agricultural and sensitive sectors. These safeguards may take the form of Minimum Import Prices (MIP) on certain products or limits on imports. US President Donald Trump’s reciprocal tariffs are set to fully activate after a 90-day suspension on July 8, although Indian exports are currently incurring only a 10% additional tariff, down from the originally proposed 26%.
Following discussions among top officials, negotiators from both nations will convene for four days to iron out the details of the agreement, with meetings ongoing until May 22. When queried about the possibility of further discussions on the proposed pact, the official affirmed, “We are striving to finalize arrangements as swiftly as possible.”
India’s Export Focus and US Demands
To enhance its export potential through the trade agreement, India is pushing for duty cuts in labor-intensive sectors such as textiles, gems and jewelry, leather goods, garments, plastics, chemicals, seafood, oilseeds, and certain fruits like grapes and bananas. On the flip side, the US is looking for duty concessions in specific industrial goods, electric vehicles, wines, petrochemicals, dairy products, and agricultural items such as apples and tree nuts.
Aiming for Expanded Bilateral Trade
The anticipated interim agreement will eventually be succeeded by the first tranche of the Bilateral Trade Agreement (BTA), which is expected to be concluded by this autumn. This initial tranche will pave the way for a comprehensive trade agreement between the two nations. Currently, the US stands as India’s largest trading partner, with bilateral goods trade reaching $131.84 billion in the recently concluded financial year. Indian exports amounted to $86.51 billion, and both countries also engage in significant services trade. Through the BTA, they aim to escalate total trade to $500 billion by 2030 from the current $190 billion.
