Deal With India With Less Tariffs Soon: US Prez Donald Trump

With just days to go before a 9 July deadline, US President Donald Trump on Tuesday said that India-US will soon strike a trade deal with "much less tariffs", which will both countries to compete.

"I think we are going to have a deal with India. And that is going to be a different kind of a deal. It is going to be a deal where we are able to go in and compete. Right now, India does not accept anybody in. I think India is going to do that, and if they do that, we are going to have a deal for much less tariffs," ANI quoted Donald Trump as saying.

The key flashpoints between the two countries have been agricultre and dairy sectors. The US is pushing for greater market access for its agricultural goods, including apples, tree nuts, and genetically modified crops. This is a key demand aimed at reducing its trade deficit with India. "There are two real challenges to concluding an initial agreement.

"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," BBC quoted Richard Rossow, who tracks India's economy at Washington's Center for Strategic and International Studies, as saying.

The talks, which have seen the Indian delegation extend its stay, carry the weight of preventing the automatic return of steep reciprocal tariffs.

The immediate pressure point is the expiration of a 90-day pause on a 26% tariff escalation, a remnant of the Trump administration's earlier trade actions. "The failure of these trade discussions would trigger the immediate reimplementation of the 26% tariff structure," a senior official told ANI.

In return for any concessions, India is seeking preferential access for its labor-intensive exports, which are crucial for job creation. These include textiles, garments, gems and jewelry, leather goods, and certain agricultural products like shrimp, oilseeds, grapes, and bananas.

While the immediate focus is on an interim pact to avert the tariff threat, both sides are also working towards a more comprehensive Bilateral Trade Agreement (BTA). The first phase of this broader agreement is optimistically targeted for completion by the fall of 2024. The ultimate ambition is to more than double the current bilateral trade from approximately $191 billion to an ambitious $500 billion by 2030.

India's non-tariff barriers is the second issue and Rossow noted that India's growing set of 'Quality Control Orders' (QCO) are creating hurdles to "US market access and may prove tricky to meaningfully handle in a trade deal".