India and the United States are reportedly on the verge of finalizing an interim trade agreement, with several sources suggesting a deal could be struck within the next 48 hours. Negotiations are currently underway in Washington, where India's trade team has extended its stay to iron out key differences before a crucial deadline. July 9 marks the end of a 90-day pause on 26% US tariffs, and if no agreement is reached by then, these tariffs will be reinstated.
The trade talks, which have been ongoing for months, have faced hurdles in several sensitive sectors. The US has been pushing India to open its markets to agricultural products, dairy, and genetically modified (GM) crops. However, India has long resisted these demands due to concerns about domestic farmers, food safety, and rural livelihoods. Recent reports suggest that agriculture, dairy, and GM crops are likely to be excluded from the interim trade deal.
India is seeking tariff cuts on key exports such as footwear and garments. Without broader tariff cuts, particularly on high-employment sectors like textiles, footwear, and leather, the ambition of doubling trade volume will remain out of reach. The US, while eager to conclude the agreement, has conveyed that the current administration cannot immediately eliminate tariffs.
One proposal under consideration involves implementing a 'self-certification' system for American exporters to address India's requirements regarding the GM-free status of imported products. This system would require the United States to provide an updated catalog of food crops where 'no GM event' has been authorized, as well as an online resource detailing food crops with authorized GM events.
The US has expressed concerns about India's comprehensive regulation, arguing that it doesn't consider whether genetically engineered variants of the specified food items are actually in production or being exported to India. Trade representatives are continuing discussions regarding the possibility of permitting US genetically modified animal feed imports.
If a trade deal is not reached before July 9, Indian exports to the US could face a total tariff of 36%, which includes 10% baseline tariffs and 26% reciprocal tariffs. Experts note that a deal favorable to India would highlight the country's diplomatic strength, potentially leading to broader economic and geopolitical advantages. Some experts suggest that a full agreement could be a multi-phased process spanning two to three years of consistent negotiations.
A successful deal would likely boost bilateral trade, improve export opportunities for Indian industries, and enhance investor confidence. The Indian stock market is hoping that a trade deal would lift tariff barriers on key exports to the US, including IT services, pharmaceuticals, textiles, electronics, and auto components.
