With just a fortnight to go for the 90-day pause period for the US reciprocal tariffs to end, India and the US are yet to firm up the contours of the proposed bilateral interim trade deal. Negotiations are still on to finalise the elements to be included, sources have said.

“The two sides are negotiating with the objective of finalising an interim trade pact by the deadline of July 9, but there is still no agreement on what it would include. The challenge is to find a package where both of us would think that we are taking something back,” a source closely tracking the deal told businessline.

If an interim deal is not finalised within the tariff pause period, there is a risk of Indian exports feeling the full blow of the 26 per cent reciprocal tariffs announced by US President Donald Trump on April 2.

“We are hopeful that an agreement would emerge by July 9 but the list of items on the table is huge. One needs to see if it can be pruned to acceptable limits within the next two weeks. If needed, the US should also consider pushing the July 9 deadline,” an industry source said.

The US is keen on increased market access for a whole spectrum of goods, including food and agricultural products, which is a sensitive area for India and cannot be committed to even in a limited way without extensive discussions in the country, the source pointed out.

Washington also wants other items in the interim deal such as government procurement, intellectual property rights, customs and digital trade including data flows.

For India, the first and foremost demand is to get a roll-back on the entire 26 per cent reciprocal tariff. While the reciprocal tariffs were suspended till July 9, a 10 per cent baseline tariff was imposed on all products in April.

New Delhi’s key demand also includes a withdrawal of the 50 per cent tariff imposed by the US on imports of steel and aluminium products of all countries which is hurting Indian exports. Another demand is for withdrawal of the sweeping 25 per cent tariffs on autos and parts imposed by the US.

“While on one hand, India’s demands include withdrawal of all the new tariffs imposed by the Trump regime over-and-above the MFN tariffs (normal tariffs), it also wants a reduction in MFN tariffs for greater market access for labour intensive items such as textiles and leather. One doesn’t know how much of it would get included in the interim deal,” the industry source said.

The interim deal will be a part of the larger bilateral trade agreement and will be absorbed in it when the first tranche of the full agreement is finalised by the proposed timeline of Fall 2025, the first source explained.

“Everything is on the board in the ongoing negotiations. But that does not mean everything can be part of the interim deal. We hope in the next few days we gain clarity on the scope of the interim deal. Otherwise, meeting the July 9 deadline would be difficult,” the source added.

In April, Trump announced reciprocal tariffs on all trade partners, with which the US has trade deficits, largely depending on the size of the deficit.

India’s competing countries, including Vietnam, Philippines, Indonesia and Bangladesh, all got slapped with tariffs higher than India but are also negotiating with the US for a roll-back. The US is an important market for India as it is the country’s largest trade partner and export destination.

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Published on June 24, 2025