With the deadline for imposition of reciprocal tariffs by the US extended to August 1, Indian negotiators will be visiting Washington next week to continue the discussions on an interim trade deal and the subsequent first tranche of the Bilateral Trade Agreement (BTA), a senior official said Thursday.
“We are not differentiating between an interim deal or the first phase of the bilateral trade agreement. We are negotiating a complete deal. Whatever will be finished, we can package it as an interim deal and for the rest, talks will continue,” the official said.
The visit comes in the midst of President Donald Trump issuing fresh letters to countries intimating them about the imposition of unilateral tariffs on their exports to the US. So far letters have been issued to 21 countries including some of the key trade partners of the US like Japan and South Korea. India has been spared the letters because both sides are in the midst of negotiating a trade agreement.
On many occasions, Trump and other senior US officials said the deal with India is “very close,” and that it’s going to be a “big” one.
When asked about the deadline for an interim agreement, the official said, “one does not know”. Both sides are, however, sticking to the autumn deadline for the first tranche of the BTA.
The latest visit comes within two weeks of a similar visit to the US by the Indian negotiating team led by chief negotiator and special secretary in the Department of Commerce Rajesh Agrawal. The team was to stay in Washington for two days but the talks went on for seven days – from June 26 to July 2. In between physical meetings India and US are also in touch virtually.
In the last round of talks the Indian side had spelt out their offers and limits of liberalisation to the US side and now await its decision.
It is the US demands on liberalisation of agriculture imports that is turning out to be a biggest issue in the negotiations. The US is aggressively pursuing the opening up of India’s agriculture market for its farmers through duty cuts and permissions to sell genetically modified products in India. It also wants India to lower duties on automobiles and buy more energy products. While protecting its farmers’ interests especially in the dairy sector and cereals like wheat and rice, India has sought greater market access for its labour intensive and emerging sectors of manufacturing like electronics.
Apart from goods trade, the other objective of the US in these negotiations is to get a more liberal regulatory climate for its technology companies in India.
Only with the UK and Vietnam has the US finalised some kind of an arrangement on trade that spares these countries from high reciprocal tariffs. Other key partners of the US like the EU still remain in talks for an agreement. Almost all countries that have been sent tariff letters are engaging with the US or plan to start talks with the Trump administration to soften the blow of reciprocal tariffs. These include Thailand, South Africa, Cambodia, Japan, Malaysia and South Korea.
The strategic partnership between the two countries is also guiding the approach in the talks. The trade deal may be sweetened with India purchasing more defence equipment from the US.
The deal between India and the US goes beyond trade and both sides are keen to preserve the relationship. The US remains the biggest market for India’s exports and the only major economy with which it enjoys a trade surplus.
In FY2025, trade between India and the U.S. reached $186 billion as per commerce ministry data. India exported $ 86.5 billion in goods to the U.S. while importing $45.3 billion, creating a goods trade surplus of $41 billion. In services, India exported an estimated $28.7 billion and imported $25.5 billion, adding a $3.2 billion surplus. Altogether, India ran a total trade surplus of about $ 44.4 billion with the US.