India and the United States are reportedly striving to finalize an interim trade deal before the July 9th deadline, aiming to pave the way for a more comprehensive agreement later in the year. Several sources indicate that negotiations have intensified, with both sides working to resolve key issues such as tariff reductions, market access, and non-tariff barriers.
The interim deal, often referred to as an "early harvest deal," is particularly significant because it aligns with the 90-day pause the U.S. had previously announced on imposing reciprocal tariffs on certain Indian goods. The potential agreement could prevent the reinstatement of these duties, providing a boost to Indian exports such as textiles, shrimp, and basmati rice.
However, reaching a consensus has not been without its challenges. Contentious issues remain, including the U.S.'s demand for greater access to India's agricultural market, particularly for genetically modified (GM) crops like maize and soybean. Indian authorities are reportedly hesitant to concede on this front, fearing adverse impacts on local farmers and raising health concerns related to GM foods. Data localization is another sticking point, with the U.S. pushing for relaxed regulations while India insists on the storage of data on local servers.
On the other hand, India is seeking exemptions from U.S. tariffs on steel, automobiles, and pharmaceuticals. They are also requesting immunity from future tariff actions once a deal is in place.
Despite these hurdles, officials from both countries are actively drafting the agreement, with only a few issues remaining to be resolved. India has expressed willingness to reduce import duties on select U.S. goods like almonds and walnuts and is open to matching U.S. base tariff rates on some products.
If the interim deal is successfully concluded, it is expected to serve as a stepping stone towards a broader trade agreement covering areas such as defense cooperation, energy trade, and manufacturing. The ultimate goal, as agreed upon by the leaders of both nations, is to double bilateral trade to $500 billion by 2030.
The U.S. has been India's largest trading partner for the past four years, with bilateral trade reaching $131.84 billion in 2024-25. The U.S. accounts for approximately 18% of India's total goods exports, 6.22% of imports, and 10.73% of overall merchandise trade.
While optimism remains, some sources suggest that the original goal of finalizing an initial deal by July 9th may be delayed, with a new target set for the fall season (September-November). This is due to the persistent "sticky issues" that are hindering progress. Nevertheless, both countries remain committed to reaching a mutually beneficial agreement that strengthens their economic ties and promotes long-term growth.
