The Indian negotiating team for the proposed India-US bilateral trade agreement (BTA) is in Washington DC for the next round of talks with American negotiators ahead of the July 9 deadline, when the 90-day pause on US reciprocal tariffs is set to end, sources said.

“All efforts are on to try and arrive at an interim deal in time to avoid the reciprocal tariffs on July 9. However, the going is tough as so far the US has not agreed to concede much ground while it has a big list of demands,” a source tracking the development told businessline.

The US wants India to agree to dismantle tariffs and non-tariff barriers to provide market access for a wide spectrum of goods, including agriculture and dairy products, in order to increase American exports and lower its trade deficit.

While the first trance of the comprehensive BTA, with several components, including goods and services, is to be concluded by Fall 2025 (September-October), the two sides are trying to clinch an interim deal by July 9.

“It is difficult for India to give commitments on lowering import duties on sensitive agricultural products or offer exemptions on mandatory non-GM certification and compulsory labelling of certain products,” the source said.

Lower import tariffs

Additionally, agreeing to lower import tariffs steeply on products such as automobiles, motor cycles and alcohol, as being demanded by the US for the interim deal itself, may be difficult if the US does not agree to lower its duties on items of interest to India, the source added.

“At present, the US has not quite agreed to roll back the full 26 per cent reciprocal duties announced against India, including the baseline tariff of 10 per cent. There is also no clarity yet on whether the 50 per cent tariffs imposed on steel and aluminium and the 25 per cent tariffs on automobile would be dismantled,” the source said.

Any reduction in MFN tariff (normal tariffs imposed equally on all trade partners) for labour-intensive products, that India wants, seems to be extremely difficult in the interim deal as the US does not yet have the US Congress’ trade promotion authority to offer tariff concessions. 

On April 2, Trump had announced reciprocal tariffs on most trade partners with which the US had a trade deficit, including a 26 per cent levy on India. While much of the tariff was put on hold for 90 days, a 10 per cent baseline tariff was imposed on all countries, including India.

“In case an interim deal is not possible by July 9, India is hopeful that the July 9 deadline would be postponed by the US to allow more time,” the source said.

Published on June 26, 2025