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Washington: US President Donald Trump said on Tuesday that he believes a trade deal between India and United States will be finalised soon. He added that this deal would help reduce tariffs and allow both countries to become more competitive.
“I think we are going to have a deal with India. It will be a different kind of deal — one that allows us to compete. Right now, India doesn’t allow much access. If that changes, we’ll get a deal with much lower tariffs,” Trump said.
Negotiations between India and the US have picked up speed, as both sides are trying to reach an agreement before the July 9 deadline. If no agreement is made by then, a set of 26% reciprocal tariffs will automatically come back into effect. These tariffs were paused for 90 days to allow time for talks.
A senior Indian official warned that if negotiations fail, these high tariffs will be immediately reimposed, affecting trade between the two countries.
One of the main sticking points in the talks is agriculture. India has taken a tough stance on protecting its agricultural sector, which includes many small farmers who depend on local markets. India has never opened its dairy sector to foreign competition in any free trade deal so far and is standing firm on that position.
On the other hand, United States is pushing India to reduce import duties on its farm products, including apples, tree nuts, and genetically modified crops.
India is asking for better access to the US market for its own exports, especially in labour-intensive sectors. These include textiles, garments, gems and jewellery, leather goods, and agricultural products such as shrimp, oilseeds, bananas, and grapes.
Chief negotiator Rajesh Agrawal, who is leading India’s team in Washington, has extended his stay beyond the originally planned talks last week, showing the urgency of the situation.
Even beyond this interim deal, both countries are working towards a larger goal, a full Bilateral Trade Agreement (BTA). The first phase of this long-term agreement is expected to be ready by fall 2024. The final aim is to more than double the current India-US trade volume from $191 billion to $500 billion by 2030.
