R. Suryamurthy
Hopes are high for a breakthrough in U.S.-India trade relations as Indian negotiators arrived in the United States on Friday for what’s anticipated to be the final round of in-person discussions. President Donald Trump expressed optimism, suggesting a “very big” bilateral trade agreement “may” be signed before the July 9 deadline for a reciprocal tariff pause. Speaking at a White House event on Thursday, Trump told reporters that such a deal would “open up India,” likening it to the recently inked China trade agreement. “Everybody wants to make a deal and have a part of it… we just signed with China yesterday. We are having some great deals. We have one coming up, maybe with India. A very big one. Where we’re going to open up India,” he said.
The Indian delegation, led by chief negotiator Rajesh Agarwal, Special Secretary in the Department of Commerce, arrived in Washington on Thursday, June 26. The two countries are seeking to finalize an interim trade pact ahead of the July 9 deadline, which marks the end of a U.S. tariff suspension announced on April 2.
Previous negotiation rounds have made limited progress, with market access in agriculture and other sensitive areas remaining key sticking points, sources familiar with the discussions said. The U.S. has cited non-tariff barriers and high Indian duties, while India has demanded concessions, particularly as the U.S. currently lacks a valid Trade Promotion Authority (TPA) to legally reduce tariffs, experts noted.
Under the proposed agreement, the U.S. is pushing for increased market access for agricultural products such as soya, corn, and apples. It also seeks large-scale commercial purchases including oil, liquefied natural gas (LNG), civilian and military aircraft from Boeing, helicopters, and nuclear reactors. Additionally, Washington wants India to ease foreign direct investment (FDI) restrictions in multi-brand retail and liberalize rules on remanufactured goods.
A working paper from India’s NITI Aayog in May suggested concessions on “soybean oil imports” to help reduce the trade imbalance. Indian officials have also indicated that increased oil and defense procurement from the U.S. could help bridge the goods trade gap. India’s crude oil imports from the U.S. rose 11.49% to $63 billion in March 2025 year-on-year.
India, in turn, is seeking duty concessions for labor-intensive sectors, including textiles, gems and jewelry, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas.
Despite the challenges, U.S. Secretary of Commerce Howard Lutnick expressed optimism earlier this month about a trade deal “in the not-too-distant future.”
“You should expect a deal between the United States and India in the not-too-distant future because I think we found a place that really works for both countries,” Lutnick said at the U.S.-India Strategic Partnership Forum (USISPF) Leadership Summit.
The two nations aim to conclude talks for the first tranche of a proposed bilateral trade agreement (BTA) by this fall (September-October), with the broader goal of more than doubling bilateral trade to $500 billion by 2030 from the current $191 billion.
Ajay Srivastava of the Global Trade Research Initiative (GTRI) said in a research note that India “must hold its ground and insist on a reciprocal, balanced, and transparent agreement.” He added that any deal “must protect our farmers, our digital ecosystem, and our sovereign regulatory space.”
Analysts believe the most likely outcome is a limited trade pact. Under such a “mini-deal,” India may cut Most Favored Nation (MFN) tariffs on industrial goods, including automobiles, and offer limited agricultural access via tariff reductions or tariff-rate quotas (TRQs) on products like ethanol, almonds, and apples. However, India is unlikely to offer tariff cuts on sensitive dairy products or food grains like rice and wheat.
If a mini-deal is concluded, the U.S. would likely refrain from reimposing the controversial 26% country-specific tariffs announced by Trump on April 2. Instead, a 10% baseline tariff may apply to most Indian imports, with the U.S. not lowering its own MFN tariffs on Indian exports, meaning Indian goods would still face higher duties in the U.S.
In the event of no agreement, trade experts believe the reimposition of the 26% country-specific tariffs on India is unlikely, though they caution that “with Trump, surprises can’t be ruled out.”
(R. Suryamurthy is a senior economic journalist based in Delhi.)
