Before the clock runs out: India, US race to seal trade deal before Donald Trump's tariffs kick in; top things to expect
India-US trade deal: Currently, India's main trade representative is conducting negotiations in Washington. (AI image)
India-US trade deal: The United States and India appear to be in the final stages of discussions to finalise the first-cut of the US-Indian trade deal. With US President Donald Trump's July deadline looming, the trade deal could determine the trajectory of their economic relationship, according to the Global Trade and Research Initiative (GTRI).
Currently, India's main trade representative is conducting negotiations in Washington, whilst both nations strive to achieve a limited arrangement -- commonly known as a "mini-deal" -- before the deadline expires.
The timeframe corresponds to President Trump's 90-day suspension of nation-specific tariffs, declared on April 2. Should negotiations fail to conclude by July 8, India might encounter renewed tariff pressures, although analysts suggest substantial duties are improbable.
India-US Trade Deal: What To Expect
The final result could be a reduced-scope trade arrangement, structured similarly to the US-UK compact finalised in May, GTRI said according to an ANI report.
This framework would require India to lower Most Favoured Nation (MFN) duties on various industrial products, including automobiles, which has been a persistent request from Washington, GTRI said.
Regarding agricultural commerce, India might grant restricted entry for American products including ethanol, almonds, apples, avocados, wine, and spirits through modest duty reductions and tariff-rate quotas, the GTRI report said.
India aims to safeguard crucial sectors including dairy, rice and wheat sectors, considering their vital role in rural sustenance and food security for its population.
The agreement could include strategic arrangements involving substantial procurement of American oil, LNG, commercial aircraft and nuclear power equipment.
The negotiations might require India to relax regulations concerning multi-brand retail and remanufactured goods importation, potentially creating opportunities for international retail corporations, the report said.
As a concession, the United States would likely maintain a 10% baseline tariff on most Indian exports, rather than implementing the previously announced 26% increase, GTRI said.
Nevertheless, the US position on maintaining its existing MFN tariffs on Indian goods raises questions about equitable treatment and mutual benefits.
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India-US Trade Deal Hurdles:
The negotiations could potentially break down if the United States persists in demanding extensive access to India's fundamental agricultural sector or continues to advocate for GMO product allowances.
India has explicitly declared that these requirements pose risks to food security and impact the sustenance of more than 700 million individuals within the nation's agricultural economy.
Although agricultural products constitute a minor share of American exports to India, the US administration continues to press strongly for enhanced market accessibility.
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Experts in India are concerned that any concessions might pave the way for subsequent requests that could undermine the country's established public procurement framework and the minimum support price (MSP) mechanism, which are vital components of its agricultural policies.
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Should the discussions fail to progress, there remains uncertainty about whether President Trump would reinstate the previous 26% duties.
Trade specialists consider this scenario unlikely, noting that India was not a primary target in the initial tariff directive. Nevertheless, considering Trump's unconventional policy decisions, all possibilities remain open.
Irrespective of how negotiations conclude, trade authorities advise that India should maintain its position and advocate for an agreement based on mutual benefit, equilibrium and clarity.
GTRI emphasises "Any trade deal with the US must not be politically driven or one-sided; it must protect our farmers, our digital ecosystem, and our sovereign regulatory space."
Today, President Donald Trump indicated that a significant trade agreement with India is on the horizon.
"We're not going to make deals with everybody. Some we are just going to send them a letter, say thank you very much. You are to pay 25, 35, 45 per cent.
That's the easy way to do it, and my people don't want to do it that way. They want to do some of it, but they want to make more deals than I would do," he said."
"But we're having some great deals. We have one coming up, maybe with India. Very big one. Where we're going to open up India, in the China deal, we're starting to open up China. Things that never really could have happened, and the relationship with every country has been very good" he added.
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