Intense Trade Discussions Followed by Imminent US Delegation Visit to India
Negotiations for an Interim Trade Agreement Between India and the US
India and the United States are in active discussions to establish an interim trade agreement, with a delegation from the US anticipated to arrive in New Delhi shortly. The objective is to conclude an agreement before July 8, the date when reciprocal tariffs imposed by the US come into full effect.
The upcoming discussions in New Delhi will see a team of American officials visiting in the coming weeks. Recently, the Indian negotiation team concluded four days of talks in Washington and has since returned to New Delhi. During the negotiations, Indian Minister of Commerce and Industry, Piyush Goyal, held two meetings with US Commerce Secretary Howard Lutnick to provide political guidance for the talks.
Initial discussions were aimed at finalizing the first segment of the Bilateral Trade Agreement (BTA) by this autumn. However, the introduction of reciprocal tariffs and their subsequent 90-day suspension has shifted focus toward establishing an interim trade deal.
Both sides are striving to reach an agreement on this interim deal before July 8, when the US’s reciprocal tariffs on Indian products will be fully enforced. President Donald Trump has instituted a 26% additional tariff on Indian imports, although its complete enforcement is postponed until July 9, making the current additional baseline tariff for Indian exports only 10%.
An official mentioned, “Negotiations are progressing well. We are aiming to finalize an interim deal before July 8, ahead of the first tranche. This will encompass goods, non-tariff barriers, and certain service sectors, including digital aspects.” As part of the interim trade deal, New Delhi is advocating for a complete exemption from the 26% reciprocal tariff on goods exported from India.
According to US law, any tariff reductions below the Most Favored Nation (MFN) rate require Congressional approval. However, since the reciprocal tariffs were enacted through an executive order pertaining to national emergencies, they can be altered by a similar executive action.
Through the BTA, India and the US aim to elevate their trade to $500 billion by the year 2030, an increase from the current $190 billion. To enhance its exports within the trade agreement, India seeks tariff concessions for labor-intensive industries such as textiles, gems and jewelry, leather items, clothing, plastics, chemicals, shrimp, oilseeds, grapes, and bananas in negotiations with the US.
Conversely, the US is looking for tariff reductions in various sectors, including certain industrial goods, automobiles (especially electric vehicles), wines, petrochemicals, and agricultural products like apples and tree nuts. The US remains India’s largest trading partner, with trade between the two nations reaching $186 billion in FY2025, according to data from the commerce ministry. India exported goods worth $86.5 billion to the US while importing $45.3 billion, resulting in a goods trade surplus of $41 billion. In the services sector, India exported approximately $28.7 billion and imported $25.5 billion, yielding a surplus of $3.2 billion. In total, India achieved an overall trade surplus of around $44.4 billion.
