Washington DC/New Delhi, 3 July 2025:
According to people familiar with the talks, India and the US are reportedly close to finalising an interim trade agreement within the next 48 hours, which would prevent the imposition of high reciprocal tariffs on July 9.
Targeted tariff reductions and strategic sector concessions are anticipated to be part of the agreement. Negotiators have been rushing to reach an agreement before the temporary 26% tariff pauses expire, following President Trump's tariff truce earlier this year that temporarily reduced duties on Indian goods to 10%. Treasury Secretary Scott Bessent told Fox News, "We are very close with India," which bolstered hopes for a speedy resolution.
Sensitive agricultural products like genetically modified corn, soybeans, rice, and wheat are major points of contention. India maintains that these products be protected in order to protect the interests of its farmers. However, according to sources, New Delhi is willing to make specific concessions in order to balance political and economic concerns, including lowering tariffs on goods like energy, cars, medical devices, walnuts, and cranberries. To reach this "mini deal," which was prioritised over more extensive free trade negotiations anticipated by the fall of 2025, negotiators, led by Rajesh Agrawal from India's commerce ministry, stayed longer in Washington. It is also expected that the interim agreement will seek tariff relief on steel, auto parts, and certain US exports to India, as well as a complete exemption from the threatened 26% tariff.
Financial markets have already reacted favorably: Asian stocks have gained, and the Indian rupee has slightly increased due to expectations of the deal. However, industry experts warn that a hasty agreement could disproportionately favor US interests, especially in the areas of agriculture and dairy, and that final ratification will require clear political direction. According to sources, this temporary agreement is strategically important to both governments. In addition to paving the way for a comprehensive bilateral trade agreement that aims to double bilateral trade to US$500 billion by 2030, it would stabilise bilateral trade just in time to avoid a tariff cliff.
An announcement that could mark a significant shift in the economic relationship between the US and India is expected soon, most likely before midnight Washington time.
