The India-US trade deal is on Trump's desk. Will he sign?

The key sticking points remain the same as reported by Mint on 11 June. “The final stretch of India-US trade talks has centred around sensitive sectors such as dairy, agriculture, digital, genetically modified (GM) seeds and medical services, with Washington pushing for greater access while New Delhi is seeking a balanced agreement that safeguards its vital sectors," said the first of the three people cited above.

With the US pause on reciprocal tariffs set to end on 9 July and the Trump administration shifting its stance from mutual tariff reduction to seeking greater market access, Indian negotiators are burning the midnight oil to secure a “respectable deal," the person added.

The Indian team extended its stay in Washington beyond the originally scheduled two-day visit that ended on 27 June, in a final effort to resolve differences, particularly over agriculture, and to conclude negotiations for an interim trade agreement.

According to the second person, the US has proposed two alternative options for tariff reduction in case White House does not “fully agree" with the terms finalized by Indian negotiators and their American counterparts.

“If India agrees to US demands for greater market access in agricultural goods, dairy and seeds, then Indian goods may face only a 10% additional tariff—which, while not ideal, is still much lower than what other countries in the Asian region are facing," said the second person.

“And in case India does not agree, it could face a 20% tariff—comprising the existing 10% baseline duty and a 10% reciprocal tariff carved out of the 16% additional duty imposed on 2 April as part of the US’s Liberation Day action," the person added. In that scenario, India would still gain a 6% relief.

The recently concluded in-person round of talks is seen as critical, especially since the US has already finalized trade deals with China, Vietnam and the UK. Although talks with China began after India’s, they progressed more quickly and helped ease bilateral tensions.

Indian negotiators are seeking the elimination of reciprocal tariffs and additional duties such as those on steel, aluminium, and auto components—along with assurances that no future tariffs will be imposed.

“Indian negotiators did their best to convince their US counterparts about the domestic sensitivities involved in these sectors. To some extent, the USTR has agreed to India’s position on not fully opening up the agriculture sector. Now, it’s up to the US President to take the final call," said the third person aware of the discussions.

However, this person expressed confidence that the deal is on track and likely to be announced by Trump before 8 July in the US.

The pact is likely to follow the US model adopted in its agreements with the UK and, more recently, with Vietnam, according to trade experts.

“Nothing would be better than the US removing the 10% baseline duty from Indian goods, but India should not open its critical sectors just to get that 10% duty removed," said Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI), a think tank.

“India should aggressively plan to diversify its exports to other countries and minimise its dependency on the US. There may be a knee-jerk impact in the initial stage, but in the long run, it will help build resilience and strengthen India’s global trade position," he added.

In its trade deal with the UK, the US did not remove the 10% baseline duty that applies to all countries. In Vietnam’s case, the total tariff was lowered from 46% to 20%, including the 10% baseline duty imposed under the Trump administration’s reciprocal tariff framework. The US-Vietnam deal also introduced a 40% tariff on transhipments through Vietnam, aimed at curbing Chinese goods being routed to the US using Vietnamese facilities.

 

“Trade agreements aim to eliminate trade barriers and to set rules that support high-standard, seamless trade that creates certainty for businesses. To that definition, none will be done with the US by 9 July. At best, there may be frameworks for future negotiations. There are too many issues to resolve with too many parties," said Steven Okun, CEO, APAC Advisors, a Singapore-based consultancy firm.

As of now, tariffs on Indian exports to the US (26%) are lower compared to those on Vietnam (46%), Cambodia (49%), Bangladesh (37%) and Thailand (36%), offering India a strategic tariff advantage in sectors such as electronics, apparel, and toys.

In the case of China, tariffs on Chinese goods had previously surged as high as 145%, but following a truce in Geneva, they were brought down to 30%. Under the new agreement, however, these have now been restructured into a flat 55% rate—significantly higher than the tariff levels currently applied to Indian goods.

Queries sent to the Indian commerce ministry, spokespersons of the USTR, and the US Embassy in New Delhi remained unanswered till press time.

In the meantime, Indian exporters have been benefiting from steeper US tariffs on Chinese goods, which gave Indian products a competitive edge.

China’s exports to the US plummeted 34.5% year-on-year to $28.8 billion in May from $44 billion a year earlier, according to data released by China’s General Administration of Customs on 10 June. This, however, was offset by China’s rising exports to members of the Association of Southeast Asian Nations (up 15% year-on-year to $58.4 billion in May), and the European Union (up 12% to $49.5 billion

 

According to data released by India’s commerce ministry on 16 June, India’s imports from China rose 21.7% to $10.32 billion in May from $8.48 billion a year earlier, driven by higher inflows of electronic goods, machinery, chemicals, and project-related equipment. Meanwhile, India’s imports from the US declined to $3.63 billion in May from $3.85 billion a year ago, while exports to the country grew 17.3% year-on-year to $8.8 billion, led by higher shipments of smartphones and electronics.

According to commerce ministry data, Indian goods exports to the US in the last financial year (FY25) increased by 11.6%, from $77.52 billion in FY24 to $86.51 billion in FY25. Imports from the US also rose, but by a smaller margin of 7.42%, increasing from $42.20 billion to $45.33 billion during the fiscal year that ended on 31 March.

Meanwhile, imports of goods from China rose by 11.5%, from $101.74 billion in FY24 to $113.46 billion in FY25, while exports to China decreased by 14.5%, from $16.67 billion in FY24 to $14.25 billion in FY25, the data showed.