A US delegation is expected to visit India in the coming weeks for the next phase of discussions around the much-anticipated interim trade agreement between the two nations. The visit comes at a crucial juncture, as both countries aim to finalise the deal before July 9, the date when the 90-day suspension of reciprocal tariffs imposed by the US on Indian goods is set to expire.

According to top sources, negotiations are progressing rapidly, signalling the growing urgency and importance of finalising the agreement. The interim pact is expected to be a stepping stone toward a broader bilateral trade agreement by the fall of 2024.

What Prompted These Urgent Trade Talks?

The push for this interim agreement gained momentum after the US imposed an additional 26% reciprocal tariff on a range of Indian products on April 2. Though the tariff was temporarily suspended for 90 days, it has created urgency on both sides to avoid long-term disruption in trade.

India is lobbying for complete exemption from this 26% tariff. Currently, even in the absence of the reciprocal tariff, Indian goods are still subject to a 10% baseline duty under US trade policy.

The exemption would help preserve the competitiveness of Indian exports to the US and maintain the strong growth in trade that both sides have enjoyed over the last few years.

Key People Involved in the Ongoing Negotiations

Rajesh Agrawal, India's Special Secretary in the Department of Commerce and the country’s chief negotiator, recently concluded a four-day official visit to Washington, where he met his US counterparts to move the deal forward.

At the same time, Commerce and Industry Minister Piyush Goyal also travelled to the US, where he met US Commerce Secretary Howard Lutnick twice, reaffirming India’s commitment to strengthening bilateral ties and smoothing out trade tensions.

Their presence in Washington underlined the strategic importance of this agreement to both countries.

US Tariff Situation: Understanding the Context

The US, under previous and current administrations, has taken a protectionist stance on trade in certain areas, often citing domestic industry concerns and trade imbalances.

While the US requires Congressional approval to lower tariffs below MFN (Most Favoured Nation) levels, it retains executive authority to remove reciprocal tariffs, which could work in India’s favour.

The 26% reciprocal tariff on Indian goods, although suspended, remains a pressure point in the negotiations. India is urging the US to fully remove this duty, as it hampers exports and could dent bilateral trade momentum.

Trade Figures Underpinning the Urgency

India and the US have enjoyed a strong trading relationship in recent years. In FY 2024-25, the US remained India’s largest trading partner for the fourth consecutive year, with total bilateral trade amounting to USD 131.84 billion.

The US also accounts for:

• 18% of India’s total exports

• 6.22% of India’s total imports

• 10.73% of India’s total merchandise trade

Moreover, India maintains a strong trade surplus with the US, which stood at USD 41.18 billion in FY 2024-25, up from USD 35.32 billion in FY 2023-24. This consistent surplus has become a matter of concern for US trade policymakers and is one of the underlying tensions in trade talks.

Looking Forward: A Roadmap to $500 Billion in Trade

With the interim trade agreement being seen as a precursor to a more comprehensive trade deal, both countries are also working toward an ambitious goal — to more than double their bilateral trade to USD 500 billion by 2030.

This long-term target will require substantial policy alignment, removal of non-tariff barriers, reduction in duties, and fostering collaboration in sectors like technology, digital commerce, energy, and defence.

Strategic and Political Relevance

These trade negotiations are not just about tariffs and deficits. They are a reflection of the deepening strategic partnership between the world’s largest democracies.

In the context of growing geopolitical tensions and economic nationalism, the India-US partnership serves as a counterbalance and a pathway toward resilient and diversified global supply chains.

By ironing out trade disagreements early and demonstrating flexibility and mutual respect, both countries can unlock higher potential in sectors ranging from AI and semiconductor manufacturing to pharmaceuticals and green energy.

Challenges That Still Remain

While progress has been positive, challenges still linger:

• US Congress approval may be needed for certain tariff reductions.

• The concerns around India’s large trade surplus may push the US to demand concessions.

• Domestic industry stakeholders in both nations have conflicting interests which may slow down certain reforms.

• The limited scope of the interim deal might leave out important areas like digital services taxation or agricultural trade barriers.

Yet, with political will and focused diplomatic engagement, these roadblocks can be overcome, at least partially, through the interim pact.

Conclusion

As the July 9 deadline draws closer, all eyes are on the upcoming US delegation’s visit to India. A successful round of discussions could lead to a mutually beneficial interim trade agreement, setting the tone for a comprehensive pact later in 2024.

Such a deal could further strengthen economic ties, boost investor confidence, and create momentum for even deeper cooperation in strategic and technology sectors.

If implemented efficiently, this agreement could be a milestone in India-US trade history, setting an example of how bilateral diplomacy and economic pragmatism can drive international partnerships forward.

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