India is actively seeking full relief from the 26% additional tariff imposed by the United States on Indian goods, aiming to secure an interim trade agreement before July 8. While the US has temporarily suspended this additional tariff until July 9, the baseline 10% tariff on Indian products remains unchanged. The ongoing talks are focused on protecting India’s sensitive sectors and seeking concessions that can boost bilateral trade, particularly benefiting labour-intensive industries like textiles and leather. Both countries aim to conclude the first phase of the deal by the fall, targeting a significant expansion of trade volume in the coming years.
Negotiations Gain Momentum Amid Tariff Suspension
On April 2, the US imposed an extra 26% reciprocal tariff on Indian exports, a move intended to address the growing trade deficit with India. However, this tariff was suspended for 90 days, creating a window for trade discussions. Commerce and Industry Minister Piyush Goyal recently visited Washington and held discussions with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to accelerate the talks. According to officials, India is pushing for a deal that would remove both the additional 26% and the existing 10% baseline tariffs, at least for key sectors. The government is also considering mechanisms like quotas or minimum import prices to protect vulnerable areas such as agriculture and dairy.
Focus on Labour-Intensive and Sensitive Sectors
India is prioritizing tariff relief for its labour-intensive industries, including textiles, leather, gems and jewellery, garments, and seafood, while also seeking to safeguard its sensitive sectors. The US, meanwhile, is pressing for concessions on industrial goods, electric vehicles, wines, petrochemicals, dairy, and certain agricultural products like apples and genetically modified crops. Although India has regulatory barriers against importing GM crops, it remains open to non-GM agricultural products like Alpha alpha hay. The talks also address non-tariff barriers that US goods face in the Indian market. With a deadline set for September-October to finalize the first phase of this bilateral trade agreement, both sides are keen to leverage the current tariff suspension period to reach an understanding.
The US remains India’s largest trading partner, with bilateral trade valued at $131.84 billion in 2024-25. India has maintained a growing trade surplus with the US over recent years, which has been a key concern prompting these tariff negotiations.
