India, US Likely to Finalize Interim Trade Deal Within 48 Hours

India and the United States are close to finalizing an interim trade deal within the next 48 hours, as negotiations continue in Washington, NDTV reported citing sources.

India's trade team extended its stay in the US capital last week to resolve key sticking points, aiming to secure an agreement before the July 9 deadline-when a temporary pause on US tariffs is set to expire.

Focus on Reciprocal Tariff Cuts

According to an NDTV Profit report, discussions have narrowed to mutual tariff reductions or eliminations, with officials urging both nations to prioritize lowering overall duty barriers.

Ajay Sahai, CEO of the Federation of Indian Export Organisations (FIEO), expressed optimism, stating: "Our estimate is that once the Interim India-US Trade Deal is finalized, Indian exports to the US will double within the next three years."
Key Sticking Points: Agriculture & Dairy

The negotiations have faced hurdles, particularly in agriculture and dairy. The US is pushing for expanded market access for its farm products, including apples, tree nuts, and genetically modified crops-a move aimed at reducing its trade deficit with India.

Richard Rossow, an expert on India's economy at Washington's Center for Strategic and International Studies, told the BBC: "First on the list is US access to the Indian market for basic agriculture products. India will need to protect its basic agriculture sector for economic and political reasons."

Pressure to Avoid Tariff Reinstatement

The talks carry high stakes, as failure could trigger the return of steep reciprocal tariffs. A major pressure point is the looming expiration of a 90-day pause on a 26% tariff hike-a holdover from the Trump administration's earlier trade policies.

A senior official told ANI: "The failure of these trade discussions would trigger the immediate reimplementation of the 26% tariff structure."

India's Demands: Boost for Labor-Intensive Exports

In exchange for concessions, India is seeking better access for its labor-intensive exports, critical for job creation. Key sectors include textiles, garments, gems and jewelry, leather goods, and select agricultural products like shrimp, oilseeds, grapes, and bananas.

Beyond the Interim Deal: A Broader Trade Pact in the Works

While the immediate goal is an interim deal to avert tariff escalations, both nations are also working toward a more comprehensive Bilateral Trade Agreement (BTA). The first phase of this broader pact is tentatively expected by fall 2024, with an ambitious target to more than double bilateral trade-from the current $191 billion to $500 billion by 2030.