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 to finalise an interim trade pact by the July 9 deadline, but there is still no agreement on what it would include. The challenge is to find a package where both would think that they are taking something back,” a source closely tracking the deal told businessline.
If an interim deal is not finalised by the deadline, full 26 per cent reciprocal tariffs may be imposed on Indian exports on July 9, as announced by US President Donald Trump .
“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 wants increased market access for a whole spectrum of goods, including food and agricultural products, which is a politically and economically sensitive area for India and may be a red-line, 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 foremost demand is to get a roll-back on the entire 26 per cent reciprocal tariff, including the 10 per cent baseline tariff already imposed.
It also wants a withdrawal of the 50 per cent tariff imposed on steel and aluminium products of all countries which is hurting Indian exports and also of the sweeping 25 per cent tariffs on autos and parts.
“Apart from dismantling of the punitive tariffs, India also wants a reduction in MFN (normal) 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 which is to be 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 its scope,” the source added.
India’s competing countries, including Vietnam, the Philippines, Indonesia and Bangladesh, all got slapped with tariffs higher than India but are also negotiating for a roll-back. The US is an important market for India as it is the country’s largest trade partner and export destination.