Potential Temporary Trade Agreement with US Could Be Finalized Imminently
India and US Near Trade Agreement Before Tariff Deadline
India and the United States are on the verge of securing an interim trade agreement ahead of the looming deadline for tariffs on July 8. This pact aims to elevate bilateral trade to $500 billion by the year 2030, featuring discussions on reducing tariffs, enhancing digital services, and significant export sectors, including textiles, gems, and agriculture.
Commerce and Industry Minister Piyush Goyal engaged in discussions with US Commerce Secretary Howard Lutnick late last night, marking their second meeting within the past week. This intensified dialogue is part of ongoing efforts to finalize the initial phase of the Bilateral Trade Agreement (BTA) before the autumn deadline. This meeting followed a four-day round of negotiations in Washington between delegations from both nations.
The preliminary meeting occurred on May 20, coinciding with officials gathering for talks regarding the deal. Following this, both countries are also considering an interim arrangement leading up to the first phase of the BTA. In a related development, there are indications that the Indian government may open its $700 billion public procurement market to foreign companies, including US entities.
After the recent meeting, Goyal stated on ‘X’, “We held a productive discussion with Secretary Howard Lutnick aimed at reaching a mutually advantageous trade agreement, reaffirming our commitment to enhancing opportunities for our businesses and citizens.” Following the prior engagement, he noted that there were “promising discussions with Secretary Lutnick to expedite the first stage of the India-US BTA.” These preliminary meetings served to provide strategic direction for the lead negotiators, while the subsequent discussions reviewed the progress made during earlier negotiations.
Bloomberg reported insights from US Treasury Secretary Scott Bessent, who expressed his expectation that trade agreements would be finalized with other countries before the end of the 90-day pause concerning the steep “reciprocal” tariffs that President Donald Trump announced on April 2. “These deals are progressing rapidly, and as we near the completion of the 90-day window, we can expect a flurry of announcements,” Bessent remarked.
Both nations are striving for a consensus on an interim deal ahead of the July 8 deadline when the full reciprocal tariffs on India will be enacted. President Trump imposed an additional 26% tariff on Indian imports, but its full application has been postponed until July 9. Currently, Indian exports are subject to a mere 10% additional baseline tariff.
“Talks are advancing positively. We aim to finalize an interim agreement that predates the first tranche before July 8. This will encompass goods, non-tariff barriers, and certain service areas like digital transactions,” an official previously stated. In this interim trade agreement, India is advocating for a complete exemption from the 26% reciprocal tariff on its exports. According to US regulations, any tariff reductions below the Most Favoured Nation (MFN) tariffs necessitate congressional approval; however, since these reciprocal tariffs were enacted through an executive order under a law related to national emergencies, they can be amended via a similar directive.
Through the BTA, India and the United States aspire to boost their trade volume to $500 billion by 2030, rising from the current $190 billion level. To enhance its exports as part of this trade agreement, India is seeking tariff concessions for labor-intensive sectors, including textiles, gems and jewelry, leather products, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas.
Conversely, the United States is looking for duty reductions in sectors such as specific industrial goods, automobiles (notably electric vehicles), wines, petrochemicals, dairy products, and agricultural items like apples and tree nuts.
As India’s largest trading partner, the US trade relationship was highlighted by bilateral goods transactions totaling $131.84 billion in the recently concluded fiscal year, with Indian exports accounting for $86.51 billion. Additionally, both countries maintain a significant services trade.
