India and the United States are reportedly on the verge of finalizing an interim trade agreement within the next 48 hours, with negotiations currently taking place in Washington. This development comes as both countries are working against the clock to meet the July 9th deadline, after which higher US tariffs could be imposed.

The core of the negotiations revolves around India's push for significant tariff concessions on its labor-intensive exports, such as garments, footwear, and leather goods. These sectors are crucial for job creation in India, and the government is keen on securing a deal that supports their growth. Meanwhile, the United States is pressing for greater access to India's agricultural and dairy markets, a sensitive issue for New Delhi due to concerns about rural livelihoods and food safety.

Several reports suggest that the US is requesting India to lower duties on items like apples, nuts, and genetically modified crops to reduce the $45 billion trade deficit. However, India has been hesitant to concede on these demands, particularly regarding genetically modified crops, due to potential risks to its farmers.

If a trade agreement is not reached by July 9, a suspended 26% levy would be reinstated, impacting both Indian exporters and American firms. Ajay Srivastava from the Global Trade Research Initiative noted that the next few days will determine whether the two countries settle for a limited "mini-deal" or halt negotiations, at least for the time being.

Given the differences and the limited time, the emerging agreement is expected to be a "mini deal" that addresses immediate concerns and lays the groundwork for future comprehensive discussions. According to Atul Keshap, former Ambassador and President of the U.S.-India Business Council (USIBC), this mini trade deal would likely be a "symbolic one" centered on "low-hanging fruits" and a first step toward achieving the 'Mission 500' target of $500 billion in bilateral trade by 2030.

The initial goal is to finalize the first phase of the Bilateral Trade Agreement (BTA) by autumn of next year, with the broader aim of increasing trade from the current $191 billion to $500 billion by 2030. To achieve this, Prime Minister Narendra Modi and President Donald Trump agreed to deepen the US-India trade relationship to promote fairness, national security, and job creation.

However, some anticipate that the "mini trade deal" is unlikely to include sector-specific tariff cuts and will instead focus on reciprocal tariff reductions or removals. India has cautioned that without broader tariff cuts, particularly on goods that generate significant employment, achieving the goal of doubling bilateral trade to $500 billion by 2030 will be challenging.

Despite the challenges, both countries recognize the importance of a trade agreement. President Trump has expressed optimism about reaching a deal with India that would allow the US to compete fairly in the Indian market. Meanwhile, India is determined to secure concessions for its labor-intensive sectors and ensure that the agreement leads to tangible benefits for its economy.