India and US edge closer to trade deal as deadline for tariff pause nears

Negotiators from India and the United States have concluded a high-stakes round of talks in New Delhi, aiming to seal an interim trade pact before Washington’s tariff suspension expires next month.

With pressure mounting, both sides say they’ve made headway, but the clock is ticking.

India and US intensify push for trade pact ahead of tariff deadline

After a week of intense closed-door discussions in the Indian capital, New Delhi and Washington appear to be inching towards a breakthrough on a long-awaited bilateral trade agreement. A senior Indian official, quoted by PTI, confirmed that the two teams engaged in detailed negotiations across a range of sectors, including digital trade, customs facilitation, market access, and sanitary and technical barriers.

The talks were held between 4 and 10 June, led by Additional US Trade Representative officials on the American side and senior officials from India’s commerce ministry.

According to Reuters, the discussions were described as “productive,” with both parties agreeing to work towards a “balanced and mutually beneficial agreement,” including short-term wins as part of an interim package.

Interim deal may precede larger agreement

According to reports, the primary focus of the latest round was easing market access for both industrial and agricultural goods, along with efforts to reduce tariffs and tackle non-tariff barriers.

Negotiators are aiming for a phased agreement with a limited deal likely before the G7 Summit later this month, where Prime Minister Narendra Modi and President Donald Trump are expected to meet.

As per PTI, the goal is to finalise the first tranche of the Bilateral Trade Agreement (BTA) by fall 2025, while an interim deal could be sealed as early as late June.

This would be critical, as the US has currently paused the imposition of reciprocal tariffs on Indian exports, including a 26 per cent duty that could hit sectors like textiles, footwear, rice, and shrimp until July 9.

Tariffs, digital trade and agriculture in focus

The Indian side is reportedly pushing for full exemption from the 10 per cent baseline tariff the US imposed under national security grounds during Trump’s earlier term.

While Washington has so far resisted that demand, India has offered tariff concessions on high-value US exports such as almonds, pistachios and walnuts, according to Bloomberg.

India has also declined to open its market to US imports of dairy, wheat and corn, which remain politically sensitive sectors. Meanwhile, both countries are exploring new ground in digital trade, customs efficiency, and legal harmonisation to facilitate smoother bilateral commerce.

Deal likely ahead of Trump-Modi meet

With President Trump keen to score a trade win before the 90-day tariff suspension ends, both sides are under pressure to announce a preliminary agreement by late June.

External Affairs Minister S Jaishankar confirmed in an interview with French daily Le Figaro that India remains “hopeful” of striking a deal before July 9.

Negotiations are likely to continue through June, possibly culminating in a signing on the sidelines of the G7 Summit in Canada.

As the US remains India’s largest trading partner for the fourth consecutive year, with trade totalling $131.84 billion in 2024–25, as per official data, the stakes for a stable trade framework have never been higher.

New Delhi negotiates on multiple fronts

Even as trade talks with Washington intensify, Commerce Minister Piyush Goyal was in Switzerland last week to finalise the India-EFTA trade deal, aimed at strengthening ties with Europe, India’s second-largest trading partner.

This multi-track approach signals New Delhi’s efforts to diversify its trade portfolio while securing favourable terms with key partners.

But with the US being a strategic and economic heavyweight, the outcome of the current round of negotiations could set the tone for India’s broader trade policy in the years ahead.

(With inputs from the agencies)