Potential India-US Temporary Trade Agreement Expected Before June 25
US-India Trade Deal Progressing Ahead of Tariff Deadline
India and the United States are on track to conclude an interim trade agreement before June 25, just ahead of the critical July 8 deadline for tariff adjustments. This agreement is designed to enhance market accessibility and reduce tariffs on significant exports. Both countries are targeting a $500 billion trade volume by 2030, with discussions encompassing goods, services, and non-tariff barriers.
As part of the interim agreement, India is advocating for a complete waiver of the 26% reciprocal tariff imposed on its goods. Official reports indicate that the long-anticipated trade negotiations between the US and India could conclude as early as June 25. A delegation of US negotiators is expected to visit India in early June, aiming to resume discussions that were halted during Indian Commerce and Industry Minister Piyush Goyal’s recent tour of the US.
The primary goal of the upcoming negotiations is to achieve a solid consensus on this interim arrangement. The US has suspended reciprocal tariffs on India and other nations until July 9, setting July 8 as the crucial deadline for reaching a mutually beneficial agreement that would facilitate enhanced market access for both parties. Currently, Indian exports face an additional tariff of only 10%.
“Negotiations are progressing positively. We anticipate finalizing an interim agreement before July 8, including provisions for goods, non-tariff barriers, and select service sectors such as digital services,” stated a source involved in the discussions. During these negotiations, Goyal had met with US Commerce Secretary Howard Lutnick on two occasions within the last week to provide political guidance.
While the discussions initially aimed to complete the first phase of the Bilateral Trade Agreement (BTA) by autumn 2023, the reciprocal tariffs and their 90-day suspension have shifted the focus toward establishing an interim trade deal. India remains firm in seeking total exemption from the aforementioned 26% tariff on its exports. According to US law, any reduction of tariffs below the Most Favored Nation (MFN) level necessitates congressional approval. However, since these reciprocal tariffs were instituted through an executive order linked to national emergencies, they can similarly be adjusted via a new executive action.
The BTA aims to escalate US-India trade from the current $190 billion to $500 billion by 2030. To enhance its export capabilities through this agreement, India is pursuing tariff concessions for labor-heavy industries, including textiles, gems and jewelry, leather products, garments, plastics, chemicals, shrimp, oilseeds, grapes, and bananas in the proposed deal with the US.
Conversely, the US is seeking tariff reductions in sectors such as selected industrial products, particularly electric vehicles, wines, petrochemical goods, dairy, and agricultural commodities like apples and tree nuts. The US stands as India’s most significant trade ally, with trade between the two nations reaching $186 billion in FY2025, according to data from the commerce ministry. India exported $86.5 billion worth of goods to the US while importing $45.3 billion, resulting in a goods trade surplus of $41 billion. In the services sector, India’s exports were estimated at $28.7 billion, against imports of $25.5 billion, yielding a surplus of $3.2 billion. Overall, India experienced a total trade surplus of approximately $44.4 billion.
