The United States and India are currently engaged in intense negotiations to finalize a trade agreement, with both sides expressing optimism about reaching a deal soon. U.S. President Donald Trump has indicated that a deal is on the horizon that would significantly lower tariffs, creating a more level playing field for businesses in both countries.
Negotiations are centered around a Bilateral Trade Agreement (BTA), which both teams are trying to finalize before the July 9th deadline. This deadline marks the end of a 90-day moratorium on proposed tariff hikes. The pause was put in place on April 2nd and temporarily halted the re-imposition of 26% reciprocal duties that were initially introduced during the Trump administration. However, a 10% baseline tariff by America remains in effect. India is seeking complete relief from the supplementary 26% duty.
According to reports, India has adopted a firmer stance on issues related to tariff cuts on agricultural products as the discussions progress. A key sticking point appears to be India's reluctance to open its dairy sector to foreign competition, a sector that supports approximately 80 million people, many of whom are small farmers. The United States is pushing for reduced duties on agricultural products, including items like apples, tree nuts, and genetically modified crops. Meanwhile, India is seeking preferential access for its labor-intensive exports, such as textiles, garments, gems, jewelry, leather goods, and agricultural products like shrimp, oilseeds, grapes, and bananas.
External Affairs Minister S Jaishankar has voiced his continued hope that a trade deal with the U.S. can be reached. He stated that the negotiations are intricate, but he remains optimistic about a successful conclusion. White House spokesperson Karoline Leavitt has also indicated that the deal could happen very soon.
If a trade agreement is not reached, India's current 10% reciprocal tariff could increase to 27% when the pause ends. Both countries are striving to finalize discussions for the initial phase of the BTA by autumn (September-October) of this year. The agreement targets increasing two-way trade to $500 billion by 2030, a significant increase from the current $191 billion.
President Trump has stated that the goal is to create an agreement where American companies can compete fairly in the Indian market. He believes that India currently restricts foreign companies, and that a new deal would allow for greater access and reduced tariffs. "I think we are going to have a deal with India... It is going to be a deal where we are able to go in and compete. Right now, India doesn't accept anybody in. I think India is going to do that and if they do that, we're going to have a deal for less, much less tariffs," Trump said.
India's merchandise exports to the United States have shown strong growth, increasing by 21.78% to $17.25 billion during April-May of the current fiscal year. Imports also grew by 25.8% to $8.87 billion. Merchandise exports to the United States increased to $86.5 billion in FY25, showing an 11.6% growth from $77.5 billion in FY24.
The Indian delegation, led by Chief Negotiator Rajesh Agrawal, has extended its stay in Washington to work towards bridging any remaining gaps. U.S. Treasury Secretary Scott Bessent has also expressed that negotiations with India are progressing well, and that a deal could lower tariffs on American imports and help India avoid the higher duties.
