India and the United States are expected to announce an interim trade agreement before July 8, as both countries work to ease tensions over tariffs and boost bilateral trade. New Delhi is seeking a full exemption from the additional 26 percent tariff imposed by the US on Indian goods, an official source revealed.
The US had imposed the additional 26 percent reciprocal tariff on Indian goods on April 2, but suspended it for 90 days, effective until July 9. However, the baseline 10 percent tariff remains in place.
India aims to protect sensitive sectors such as agriculture and dairy, potentially through quotas or minimum import prices (MIP), while also seeking tariff relief for labor-intensive industries including textiles and leather. Commerce and Industry Minister Piyush Goyal, who recently visited Washington, held talks with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to advance the discussions.
According to the official, “Talks are moving positively. We expect to conclude an interim deal before July 8. This deal will cover goods, non-tariff barriers, and services like digital trade. We want both the 26 percent additional duty and the 10 percent baseline tariff removed for India.”
The US administration requires congressional approval to reduce tariffs below Most Favored Nation (MFN) rates but can independently remove the reciprocal tariffs it imposed on countries including India.
India is pushing for commitments from the US to lower duties on labor-intensive exports such as textiles, gems and jewelry, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas. Meanwhile, the US seeks tariff cuts on certain industrial products, electric vehicles, wines, petrochemicals, dairy, and agricultural items including apples, tree nuts, and genetically modified (GM) crops.
However, India continues to restrict imports of GM crops due to regulatory concerns but is open to non-GM products like alfalfa hay used as cattle feed.
The US has repeatedly raised concerns about non-tariff barriers affecting American products in the Indian market. The two countries have set a target to finalize the first phase of the bilateral trade agreement by September-October 2025, with the goal of more than doubling bilateral trade to USD 500 billion by 2030.
The ongoing negotiations involve minister-level talks followed by discussions among chief negotiators, which are scheduled to continue until May 22. Both sides are eager to use the 90-day tariff suspension period to make significant progress.
The US remains India’s largest trading partner for the fourth consecutive year, with bilateral trade reaching USD 131.84 billion in 2024-25. The US accounts for around 18 percent of India’s total exports and over 10 percent of its overall merchandise trade. India ran a trade surplus of USD 41.18 billion in goods with the US last fiscal year, a figure that has been steadily increasing over the past several years.
The interim trade agreement, if finalized, could mark a major step toward resolving tariff disputes and enhancing economic cooperation between the two countries.
