India-US Interim Trade Deal Unlikely Before August As Tariff Talks Stall
As the August 1 deadline for tariffs on India approaches, an interim trade deal before those levies hit is looking unlikely. Image courtesy: AI-generated picture via DALL-E
Prospects of an interim trade agreement between India and the United States have weakened as negotiators remain deadlocked over key tariff issues.
Despite five rounds of discussions, no breakthrough has been achieved on contentious items such as agricultural products and metals, making it unlikely that a deal will be reached before Washington’s August 1 deadline.
While the US has paused a proposed 26% tariff hike on Indian goods, that window is set to close soon. With India yet to receive a formal tariff notification, the immediate outcome remains uncertain, although virtual talks continue.
What is holding back the India-US trade deal?
The negotiations have run into familiar sticking points. India has refused to make concessions on its agriculture and dairy sectors, while the US has not agreed to roll back its tariffs on Indian exports of steel, aluminium and automobiles. Indian officials are trying to explore whether the unresolved issues can be deferred to a later stage and excluded from an interim agreement, Reuters reported.
India’s delegation, led by chief negotiator Rajesh Agrawal, returned from Washington recently with little progress. A US team is expected to visit New Delhi soon to keep the dialogue going, but officials on both sides have acknowledged that an interim deal before the deadline is now unlikely.
What are the implications if talks fail?
A failure to reach a deal could lead to renewed tariffs on Indian exports, with sectors like gems and jewellery particularly vulnerable. Ajay Sahai, director general of the Federation of Indian Export Organisations, warned that a 26% tariff would have a significant impact, though he expected any disruption to be temporary, citing the longer-term goal of a comprehensive agreement.
US Treasury Secretary Scott Bessent said on Monday that the Trump administration prioritises the quality of trade deals over arbitrary deadlines. Asked about potential extensions, he noted that it would be President Trump’s call.
Indian officials, meanwhile, remain cautiously optimistic that a broader deal could be concluded by September or October, consistent with the timeline agreed between Prime Minister Narendra Modi and Trump in February. Another government source said the number of negotiation rounds held so far, and the continued engagement, offer reason to believe a final agreement is still within reach.
