NEW DELHI: India is aiming to restore the status of its exports to what it was before April 2, particularly in labor-intensive sectors, as part of an interim trade deal with the United States. In return, India is offering concessions on American imports, including agricultural products.
“Discussions are progressing positively. We are aiming to finalize an interim deal before July 8, ahead of the first tranche. This will cover goods, non-tariff barriers, and certain service sectors like digital trade. Our primary goal is to eliminate the additional 26% duty and the 10% baseline tariff on India’s exports,” an official stated.
While the reciprocal tariffs imposed by the US were temporarily suspended for 90 days, the 10% baseline duty on all countries remains in place, making Indian exports less competitive. A comprehensive trade deal, which would cover 85-90% of products from both nations—a concept known as “substantial coverage”—is unlikely until the Trump administration receives approval from Congress to reduce tariffs below the most-favored-nation (MFN) rates.
India Seeks US Duty Reductions for Key Sectors
India is pressing for tariff reductions on labor-intensive sectors such as textiles, leather goods, gems and jewelry, plastics, chemicals, shrimp, oilseeds, and certain fruits. In exchange, the US is pushing for cuts on duties for its products, including automobiles (especially electric vehicles like Tesla), whiskey, wine, petrochemicals, dairy, and farm products, including genetically modified crops.
While India is open to reducing customs duties on farm products, it remains firm in its stance against allowing genetically modified crops into the country. Reflecting on the US-UK trade deal, which saw the US offer concessions on around 100 products while extracting duty cuts for approximately 2,500 American goods, India may have to make additional concessions, including increasing imports of LNG, fertilizers, and defense equipment, to secure a favorable deal.
Commerce and Industry Minister Piyush Goyal and a team of Indian negotiators are currently in the US engaging in detailed discussions on the bilateral trade agreement, which was agreed upon by US President Donald Trump and Indian Prime Minister Narendra Modi for completion by Fall (September-October).
Earlier, the Indian government was hoping for an “early tranche” of the trade deal before the 90-day suspension on reciprocal tariffs ends, but officials have noted that negotiations are progressing well.
“Good discussions with Secretary @HowardLutnick towards expediting the first tranche of the India-US bilateral trade agreement,” Goyal tweeted on Tuesday after meeting with US Commerce Secretary.
While the deal remains in progress, both sides are expected to continue working toward a mutually beneficial agreement, with India focusing on securing fair tariffs for its export sectors.
