Imminent India-US Trade Deal? Key Agenda and Concessions Explained
US-India Trade Deal Discussions Advancing in New Delhi
Progress is being made towards a significant trade agreement between India and the United States as officials engage in talks in New Delhi. The discussions center around reducing tariffs, defense exports, and enhancing market access in key industries, including agriculture, automobiles, and textiles. US trade representatives are expected to arrive in New Delhi for crucial negotiations aimed at strengthening bilateral relations.
Final Stages of Negotiations Underway
The concluding phase of the India-US trade negotiations is set to commence shortly. US negotiators are anticipated in India today, June 5, for a two-day meeting. Reports suggest that New Delhi may offer some concessions, including lowering tariffs on specific US products as part of the discussions. Sources indicate these concessions could involve certain agricultural goods as well as defense-related equipment. In exchange, India is expected to request reciprocal tariff reductions and improved access to the US market for labor-intensive sectors, particularly textiles and leather goods.
US Trade Partners Reminded of Deadline
This week, the White House confirmed that the US has reached out to its trading partners, urging them to present their best offers by Wednesday. Karoline Leavitt, a spokesperson for the White House, stated, “The United States Trade Representative has sent a letter to all our trading partners as a friendly reminder that the deadline is approaching.”
Impending Expiry of Tariff Suspension
The US has initiated a 90-day suspension of a 26% reciprocal tariff on Indian imports, which is scheduled to expire on July 8, 2025. This temporary cessation has intensified the urgency for both sides to finalize a trade agreement before the looming deadline.
US Seeks to Address Trade Deficit with India
Recent analyses and conversations are suggesting that the US aims to gain better market access for exports including oil, defense equipment, soybeans, corn, whiskey, and automobiles. Such strategies are aimed at mitigating the trade deficit the US experiences with India while lowering existing tariff barriers. US Secretary of Commerce Howard Lutnick has pointed out that US exports to India surged by 11.49%, reaching $63 billion in March 2025 compared to the previous year.
Focus on Increasing US Defense Exports to India
India has historically engaged in defense procurement from Russia. However, the US is now looking to enhance its defense exports to India. The ultimate goal is to escalate bilateral trade from the current $190 billion to $500 billion by the year 2030. During the US-India Strategic Partnership Forum in Washington DC, Lutnick remarked, “Certain actions by the Indian government have generally not aligned with US interests, particularly regarding military purchases from Russia.” He noted that India is already making efforts to address these issues.
Agricultural Products Under Scrutiny
The US has expressed concerns regarding India’s agricultural trade policies, which limit imports through high tariffs and restrictions on genetically modified organisms. The US is seeking improved access for essential agricultural products like soybeans and corn, which are also major exports to China, positioning India as a potential market amid tense trade relations with China. Additionally, the US may pursue increased access for its apples.
Potential Tariff Reductions on Automobiles and Whiskey
India is anticipated to liberalize its protected sectors such as automobiles and alcoholic beverages, resembling its recent trade agreement with the UK. Prior to the negotiations, India reduced duties on bourbon whiskey, lowering them from 150% to 50%. Most bourbon whiskey is produced in the US, with 95% sourced from Kentucky.
Zero-for-Zero Tariff Proposal on Steel and Auto Parts
India has also proposed a “zero-for-zero” tariff agreement for US auto parts and steel in response to President Trump’s announcement of potential increases on existing tariffs for steel and aluminum imports on May 30. Additionally, India has filed a formal complaint with the World Trade Organization, asserting its right to impose retaliatory tariffs on US products.
Remarkable Trade Relations and Export Figures
In the fiscal year 2024-25, India exported approximately $4.56 billion worth of iron, steel, and aluminum to the US. This comprised $587.5 million in iron and steel, $3.1 billion in iron or steel products, and $860 million in aluminum materials. The US maintained its status as India’s largest trading partner for the fourth consecutive year in 2024-25, with bilateral trade amounting to $131.84 billion. The US constitutes roughly 18% of India’s total goods exports, 6.22% of its imports, and 10.73% of overall merchandise trade.
Optimism for a Trade Agreement
US Commerce Secretary Howard Lutnick conveyed a positive outlook regarding the imminent trade agreement, stating, “I believe we are in a very favorable position, and you should anticipate a deal between the United States and India in the near future, as we have found a mutually beneficial path forward.” His comments reflect a notable advancement in negotiations that have faced numerous hurdles over the years. The ongoing visit by US officials to India aims to finalize an interim trade agreement while India advocates for complete exemption from the 26% reciprocal tariff on its goods.
