Negotiations for a US-India trade deal are ongoing as Indian negotiators recently returned from Washington. Despite the return of the Indian delegation, a finalized agreement remains elusive. Both countries are aiming to resolve the outstanding issues before July 9. This date coincides with the conclusion of a 90-day suspension of tariffs imposed by the US.
According to an Indian government official, the trade talks are not bound by any specific deadline. India is clear that it will only sign a deal if it is mutually beneficial. Commerce Minister Piyush Goyal has emphasized that India will prioritize agreements that benefit both nations, rather than adhering to external deadlines. He stated that any agreement will only occur when it is a win-win situation for both countries.
Several sticking points remain. These include disagreements regarding agriculture and automobiles. The US is pushing for greater access to the Indian market for its agricultural products, including genetically modified (GM) crops and dairy products. However, India has been hesitant to concede on these issues, especially concerning the dairy sector. India has consistently refused to open its dairy sector in any free trade agreement signed so far. This is because the dairy and agriculture sectors are crucial to the livelihoods of approximately 80 million people in India, most of whom are small farmers.
India is seeking concessions from the US on tariffs for its labor-intensive goods. These include textiles, footwear, gems and jewellery, leather products, garments, plastics, chemicals, shrimp, oilseeds, grapes, and bananas. The US, on the other hand, is reportedly unwilling to offer concessions on steel. It is also seeking reduced duties on industrial goods, electric vehicles, wines, and petrochemical products.
Despite these challenges, both sides have expressed a commitment to reaching an agreement. The goal is to finalize the first tranche of a comprehensive Bilateral Trade Agreement (BTA) by September-October 2025. The long-term objective is to more than double bilateral trade from the current $191 billion to $500 billion by 2030.
In the interim, both countries aim to secure an agreement that addresses immediate concerns. For India, this includes relief from the additional 26% reciprocal tariff imposed by the US. For the US, this involves greater market access and reduced barriers to trade.
The current trade negotiations are taking place against the backdrop of broader US trade policy changes. The US has imposed tariffs on several countries, and India is seeking to avoid similar measures. The US had announced steep tariffs on several Asian countries, 26 per cent on India, 36 per cent on Thailand and 32 per cent on Indonesia. The US is also pushing countries, including Japan, India and Vietnam, to give more access to agricultural products.
