Negotiators from India and the US have nearly finalized the contours of a preliminary trade agreement, but two key sticking points remain that require top-level political intervention, sources close to the talks revealed. The interim deal, which could be announced before July 9, would mark a major breakthrough ahead of a comprehensive trade pact expected by October.
Key Sticking Points
-
Repeal of Punitive Tariffs
India wants a firm assurance from the US that all punitive levies — including the 26% reciprocal tariff (10% baseline + 16% country-specific to activate on July 9) — will be withdrawn.
It also demands the revocation of safeguard duties challenged at the WTO:-
50% on Indian steel and aluminium
-
25% on autos and parts
In return, India is open to proportionate MFN tariff cuts.
-
-
Access to Agriculture Sector
The US is pressing India to open politically sensitive agricultural markets, with a preference for Tariff Rate Quotas (TRQs) on items like:-
Ethanol
-
Almonds & Walnuts
-
Apples, Raisins, Avocados
-
Olive oil, Spirits & Wine
However, India has ruled out any access to dairy, rice, or wheat, which directly affect rural livelihoods and over 700 million people.
-
What’s at Stake?
-
The US has proposed a US-UK-style model where Britain accepted a 10% baseline tariff but gained sectoral relief. India has rejected this approach, viewing it as inadequate.
-
The interim deal primarily focuses on goods trade, leaving out services and digital trade for future discussions.
What Experts Say
Ajay Srivastava, Founder, Global Trade Research Initiative, says:
“A limited pact is likely, with India offering cuts on industrial goods while resisting US pressure on core agri-sectors.”
He warns:
“If the US pushes for access to GM products or dairy, talks could collapse.”
Another trade consultant added:
“It’s now time for Washington to show flexibility, since India has already signaled strong intent by offering concessions.”
Team India in Washington
India’s negotiating team, led by Rajesh Agrawal, remains in Washington this week as discussions continue. A political breakthrough from the highest levels — PM Modi and President Trump — may be required to resolve the stalemate.
What’s Next?
-
If resolved, the mini-deal will cover tariff reductions and TRQs on select items.
-
The larger deal covering digital, services, and broader trade cooperation is being targeted for October 2025.
