India and the US are understood to be working on an early harvest deal that would only cover tariff-related issues and could possibly be completed by July. A more comprehensive agreement on several non-tariff issues between the two countries is likely to be reached in the next phase around October, if all goes well.
According to sources, India is keen on completing the discussions and finalising an interim arrangement on tariffs before the reciprocal tariffs by the US kick in from July 9. The talks are expected to cover key export items, with the US keen on extending its markets in India. However, sensitive items for India such as dairy and agriculture,e are expected to be kept out of the tariff talks, sources have indicated, noting that every country would like to protect their own interests. But like with the free trade agreement with UK, India is keen on getting lower tariffs for its labour-intensive export sectors like textiles, leather and gems and jewellery.
The US continues to remain interested in lower duties for its goods, such as automobiles, including electric vehicles and whiskey as well as agricultural goods. More purchase of oil and defence equipment by India is another key item on the US wishlist.
Further discussion on non-tariff barriers, including issues related to tech, e-commerce and data storage, may be taken up after July.
Commerce and Industry Minister Piyush Goyal as well as a delegation of Indian negotiators led by Rajesh Agarwal, special secretary, commerce, are currently in the US to work on the proposed bilateral trade agreement.
“Good discussions with Secretary Howard Lutnick towards expediting the first tranche of India-US Bilateral Trade Agreement,” Goyal said on social media X.
While Goyal is on a four-day trip to the US from May 17 to May 20, the Indian team of negotiators will return on May 23.
Under its reciprocal tariff plan, the US had imposed a 26% tariff on India, but had then announced a 90-day pause on it, which comes to an end on July 8 midnight. India is keen on finalising the first tranche of the BTA with the US before that to escape the higher tariffs and protect a key export market. The US is India’s largest trading partner, with bilateral trade at $131.84 billion last fiscal.
