On July 1st, US President Donald Trump reiterated that the US-India trade deal is under negotiation. It will be announced soon and will have “much fewer tariffs”.
“I think we are going to have a deal with India. And that is going to be a different kind of a deal. It is going to be a deal where we are able to go in and compete. Right now, India does not accept anybody in. I think India is going to make that change. If they do, we will have a deal with much less tariffs,” Donald Trump said.
Also read: Trump-Era Trade Pressure Sees India Among Nations Considering Tariff Cuts
Pause on Tariffs ends July 9
The US President unveiled reciprocal tariffs and caused a lot of hue and cry on the global economic front. They were imposed on 2nd of April. Then, Trump paused them for 90 days. This 90 day pause terminates on 9th of July. Therefore, India has been working on finalising a bilateral agreement before July 9. They aim to avoid getting caught up in the tariff escalation.
Government sources, stated that India has taken a firmer stance on agricultural matters. The talks have reached a pivotal moment. Earlier, it was reported that the Indian delegation, led by Chief Negotiator Rajesh Agrawal, has extended its stay in Washington. Two negotiations were scheduled on July 3 and 4. These negotiations have been extended. Both nations work urgently to finalise an interim trade agreement before a crucial July 9 deadline, as per the report.
The failure of these negotiations would lead us back to square one, i.e., where India faced 26 percent reciprocal tariffs. Two major sectors of discussion are highlighted below.
India is tough on Agriculture
A major portion of the Indian population is still dependent on agriculture. India’s farming landscape is dominated by small-scale subsistence farmers with limited land holdings. Granting concessions on agricultural imports would lead to further challenges for domestic farmers. The Indian government has considered both – the economic and the political aspect. It has adopted a hard stance regarding agricultural tariffs.
The US is pushing for reduced duties on agricultural products, including apples, tree nuts, and genetically modified crops.
India Aims to Leverage Labour Intensive Exports
Similar to agriculture, the Indian dairy sector has never faced competition from foreign countries. It is the largest in the world and supports millions of farmers. The government support helped the dairy sector flourish in India. Now, the government is reluctant to break the status quo.
In the trade deal, India is seeking preferential access for its labour-intensive exports. These exports include textiles and garments, gems and jewellery, leather goods, and agricultural products. Some examples of these agricultural products are shrimp, oilseeds, grapes, and bananas.
External affairs minister S Jaishankar has expressed hope for a trade deal with the US. This remains the case despite India’s hardening position on tariff cuts for agricultural products. “We are in the middle, hopefully more than the middle, of a very intricate trade negotiation. Obviously, my hope would be that we bring it to a successful conclusion”, Jaishankar told Newsweek magazine”. The comments coincided with White House spokesperson Karoline Leavitt saying the deal would happen very soon.
Ultimately, both countries have expressed their commitment to achieve a bilateral agreement. They aim to more than double bilateral trade. The target is to increase trade from the current $191 billion to $500 billion by 2030.
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