India Targets US Mini Trade Deal by July to Avoid Tariffs

India and the US are in advanced stages of finalising a mini trade agreement before July 9. This follows the US decision on April 2 to impose an additional 26% tariff on Indian goods, which was suspended for 90 days. Without a deal in place by the end of this period, the tariffs are expected to come into effect.

India Seeks Full Tariff Exemption

Indian officials are aiming for complete exemption from both the 26% additional tariff and the 10% baseline duty that remains in force. However, lowering tariffs below the most-favoured-nation (MFN) rate requires US Congressional approval. An exemption, however, can be granted through administrative action.

Focus on Sensitive Sectors

India has proposed a minimum import price (MIP) or quotas for sensitive categories like dairy and agriculture. It has also requested tariff concessions on exports such as leather, textiles, garments, gems and jewellery, bananas, grapes, shrimp, and chemicals.

US Seeks Market Access in Return

According to a news report, the US is seeking greater access for its exports in categories including electric vehicles, industrial goods, petrochemicals, wines, dairy, and genetically modified crops. India has clarified that while it is open to importing non-GM agricultural goods like alfalfa hay, GM produce remains restricted due to domestic regulations.

Progress on Bilateral Trade Agreement

The interim deal is to be the first phase of a broader bilateral trade agreement (BTA), with the initial tranche targeted for finalisation by September or October 2025. The BTA will cover around 19 chapters, including goods, services, digital trade, tariffs, non-tariff barriers, and rules of origin. The negotiations are part of the countries' efforts to expand bilateral trade to $500 billion by 2030, as envisioned in the Bilateral Trade Agreement (BTA).

Read more: When To Expect the India-US Trade Agreement?

Ongoing Engagement

Commerce Minister Piyush Goyal recently met with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick. Negotiations between chief trade negotiators are scheduled to continue until May 22, 2025.

In FY 24-25, bilateral trade between India and the US stood at $131.84 billion. India’s trade surplus with the US was $41.18 billion, up from $35.32 billion the previous year.

Conclusion

Negotiations continue as both sides look to resolve tariff concerns before the July 9 deadline. The outcome will likely shape the next phase of India-US trade relations.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.