India and the United States are close to finalising an interim trade deal as part of their ongoing negotiations, but demands from Washington regarding agricultural imports are proving to be a significant hurdle, according to Indo-American Chamber of Commerce Executive Council Member Sunil Jain. His comments come as the Indian delegation, initially set for a short visit, has extended its stay in Washington to advance discussions before the crucial July 9 deadline.
Agricultural Sensitivities Stall Talks
Sunil Jain emphasised the sensitivity of India’s agricultural sector within the negotiations, noting that agriculture is a critical component of India’s GDP and vital for its people. He highlighted that importing agricultural products, particularly genetically modified items such as maize, cotton, soybeans, almonds, and apples, remains challenging due to India’s legal framework and public sentiment, as these imports are currently banned under Indian law.
He pointed out that while the United States is keen on including these products in the trade agreement, India has maintained that its agriculture and dairy sectors are “big red lines”, a stance echoed earlier by Finance Minister Nirmala Sitharaman. These challenges have created a bottleneck in the negotiations, despite progress in other sectors.
Tariff Deadline and Proposed Path Forward
The negotiations have gained urgency as the 90-day suspension of former President Donald Trump’s 26% reciprocal tariffs on specific goods nears its July 9 expiration, while the baseline 10% tariffs remain in place. Sunil Jain suggested that both countries should consider advancing the trade deal by setting aside contentious agricultural products for the moment, allowing them to focus on sectors where consensus can be reached, such as auto components, aluminium, and steel.
Sunil Jain added that excluding problematic products temporarily would enable India and the US to save a significant portion of India’s exports from facing high reciprocal tariffs, even if the base tariffs continue. He proposed that discussions on these challenging products could resume three to four months later, once a broader framework is established.
Sunil Jain mentioned that the zero-tariff trade regime between the two nations could only realistically be settled post-September or October, but even working under a 10% base tariff would be manageable for India in the interim. He stressed that any bilateral agreement would require a give-and-take approach from both sides, reflecting the mutual interests of the world’s two largest democracies as they aim to move forward together in strengthening trade ties while respecting each country’s critical economic sectors.
