India Nears Interim Trade Deal with US Tariffs Below 20%
India and the US are reportedly close to finalising an interim trade deal that could cap US tariffs on Indian goods below 20%, offering New Delhi a more favourable position compared to other Asian nations facing higher duties. The deal aims to delay or avoid sweeping reciprocal tariffs set to take effect on August 1.
Tariff Reduction to Aid Indian Exports
Under the draft agreement, India may be spared a formal tariff demand letter and instead receive a joint statement setting a tariff baseline below 20%, down from the 26% originally targeted. This will help safeguard vital Indian export sectors—such as pharmaceuticals, textiles, gems, and electronics—from abrupt tariff hikes that could threaten their competitiveness.
Timing and Flexibility in Negotiations
This interim pact is being structured to allow further negotiations into the fall of 2025, providing both countries time to resolve sensitive issues like agricultural tariffs, dairy regulations, and data localisation norms. India is expected to send trade representatives to Washington soon to work out final details.
Strategic Benefits for India
By avoiding immediate high tariffs, Indian exporters gain breathing space and clarity, reinforcing market confidence. This early deal would also align with a broader US strategy that has already secured agreements with the UK and Vietnam, placing India on a select list of preferential trade partners.
Challenges Remain
Despite progress, key differences persist. India remains reluctant to open its agriculture and dairy sectors or ease data localisation rules—demands made by Washington. Commerce Minister Piyush Goyal has stated that any agreement must be in India’s interest and not driven by deadlines.
Market Response
Indian financial markets reacted positively to the news, as the rupee gained modestly and trade-linked stocks stabilised. Yet analysts caution that final terms are not guaranteed, and trade-sensitive sectors must watch the next steps closely.
