India and the United States are striving to finalize an interim trade agreement by June 25, 2025, potentially paving the way for a broader bilateral trade agreement (BTA) before autumn. This development comes as trade talks progress, with Indian officials recently engaging in discussions in Washington.
The primary focus is securing an interim trade arrangement before finalizing the first phase of the BTA, especially with the U.S.'s 26% reciprocal tariff on India suspended until July 9, 2025. This tariff was initially implemented on April 2, 2025. Currently, Indian exports are subject to America's standard 10% baseline tariff. Sources indicate that the interim trade agreement is within reach by the aforementioned June deadline, signaling positive momentum in negotiations.
India's chief negotiator, Special Secretary in the Department of Commerce Rajesh Agrawal, recently concluded a four-day visit to Washington, where he engaged with his U.S. counterpart to discuss the proposed agreement. Commerce and Industry Minister Piyush Goyal also visited Washington to boost trade discussions, meeting with U.S. Commerce Secretary Howard Lutnick twice.
In the ongoing trade negotiations, India seeks complete relief from the 26% reciprocal duty imposed on its domestic products. Simultaneously, India is looking to negotiate duty reductions with the U.S., focusing on sectors that are significant employers, including textiles, gems and jewellery, leather products, garments, plastics, chemicals, shrimp, oil seeds, chemicals, grapes, and bananas. The U.S., on the other hand, is seeking tariff reductions on certain industrial goods, automobiles (particularly electric vehicles), wines, petrochemical products, dairy, and agricultural items like apples, tree nuts, and GM (genetically modified) crops. While India remains hesitant about importing GM crops due to domestic regulations, it is open to importing non-GM products like Alpha alpha hay.
For the fourth consecutive year, the United States remained India's largest trading partner in 2024-25, with bilateral trade reaching $131.84 billion. The U.S. accounts for approximately 18% of India's total goods exports, 6.22% of imports, and 10.73% of the nation's total merchandise trade. India has a trade surplus with the U.S., amounting to $41.18 billion in goods in 2024-25, up from $35.32 billion in 2023-24. The U.S. has expressed concerns about this increasing trade imbalance. Both countries aim to increase bilateral trade to $500 billion by 2030, more than doubling current levels.
A successful trade deal between India and the U.S. could transform existing challenges into opportunities, potentially creating new avenues for market access and enhancing exports, according to a finance ministry report. A U.S. official indicated that India is among a select group of countries with agreements "close to the finish line," and that the U.S. is weighing offers from about 15 countries and aims to finalize several deals within weeks, signaling a shift from across-the-board tariffs toward a more selective, incentive-based approach.
