The deadline for India and the US to sign a new trade deal is July 9, and time is running out. This deal is important because if it doesn’t happen, India could face a 10% tariff on its exports to the US – though that’s still better than the 26% tariff the US had announced earlier in April.
Indian officials have arrived in Washington for the final round of talks. Both countries have a lot to gain – and lose. For India, it’s about protecting its farmers and small industries while getting better access to the US market. For the US, it’s about reducing the trade gap and increasing sales of American goods.
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What the US Wants
- The US wants India to open up its agriculture, dairy, aviation, and energy markets.
- It’s asking India to lower tariffs (taxes) on products like soy, wheat, corn, ethanol, and apples – items the US usually exports to China.
- The US also wants to sell genetically modified (GM) crops in India.
- India is resisting these demands, especially in agriculture and dairy, saying it needs to protect its farmers and support prices.
- However, India may reduce tariffs on soybean oil and cars, which the US has been asking for.
- India has already started buying more crude oil from the US – around $63 billion worth by March 2025, up 11.5% from the previous year.
What India Wants
- India wants the US to remove the high tariffs on its steel and auto parts.
- The US had earlier imposed 50% tax on steel and 25% on car parts from India.
- But the US is asking India to first lower its own tariffs on farm goods, cars, and alcoholic drinks, and also relax other import rules.
Experts’ View
Economic think tank GTRI believes that any deal must be fair and not one-sided. It warns that India must protect its:
- Farmers
- Digital economy
- Policy-making freedom
GTRI predicts that the two countries might sign a “mini” trade deal, similar to the one between the US and the UK in May. In this deal:
- India may cut import taxes on cars and industrial goods.
- India might offer limited access to US farm products like ethanol, almonds, apples, wine, olive oil, and more through special quotas.
The US may also:
- Ask India to buy military and civilian aircraft, oil, and nuclear equipment.
- Push India to ease FDI rules in retail, which could benefit big American companies like Amazon and Walmart.
- Request India to relax rules on used (remanufactured) goods.
The Bigger Picture
In February, Prime Minister Modi and President Trump agreed to boost India-US trade from $262 billion in 2024 to $500 billion by 2030. Whether that goal is achievable depends on how the ongoing talks go – and time is quickly running out.
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