The US has reportedly been pushing hard for tariff concessions and opening up the Indian markets for dairy and agricultural items like genetically modified crops, apples and nuts.
New Delhi: Bilateral trade agreement between India and the US seems unlikely to be signed by the July 8 deadline, which marks the end of President Donald Trump’s 90-day suspension of the so-called “liberation day” tariffs, creating renewed uncertainty for exporters.
According to sources, agricultural goods remain the key sticky issue. The US has been pushing hard for tariff concessions and opening up the Indian markets for dairy and agricultural items like genetically modified crops, apples and nuts.
So far, India has not budged on these issues. Concession on agricultural items is not part of any of the trade deals signed by India so far.
“For us, the priority is protecting India’s interest,” said a government source.
An Indian delegation led by special secretary in the Department of Commerce and India’s chief negotiator Rajesh Agrawal is in the US to take forward the negotiations.
This comes amid claims by Trump that the US may have a “very big” trade deal.
“Everybody wants to make a deal and have a part of it. Remember a few months ago, the press was saying, ‘You really have anybody of any interest? Well, we just signed with China yesterday. We are having some great deals. We have one coming up, maybe with India. Very big one,” Trump said at the White House on Thursday.
According to analysts, India and the US may opt for a “mini-deal” in line with the US-UK deal announced in May. The mini-deal, if concluded, is likely to focus on tariff reductions and strategic commitments, leaving broader free trade agreement (FTA) issues—including services trade, intellectual property rights and digital regulations—for a future negotiation.
Under the mini-deal, India may agree to lower tariffs on a wide range of industrial goods, including automobiles and petrochemical products.
However, New Delhi is unlikely to budge on the farm sector, which is politically and economically sensitive, affecting over 70 crore people in India’s rural economy.
Any substantial agreement on the farm sector looks unlikely unless there is political push from the top level of the two countries. However, India may offer limited market access through tariff reductions and tariff-rate quotas (TRQs) on select US products such as ethanol, almonds, walnuts, apples, raisins, avocados, olive oil, spirits and wine.
“Any trade deal with the US must not be politically driven or one-sided, it must protect our farmers, our digital ecosystem, and our sovereign regulatory space,” said Ajay Srivastava, founder, Global Trade Research Initiative (GTRI).
EEPC India Chairman Pankaj Chadha said the India-US trade deal should include the sectoral tariffs like steel, aluminium and auto parts, as it is crucial for engineering goods exports, which account for nearly one-fourth of India’s total merchandise exports.