US-India trade deal soon, will help America compete: Trump

US President Donald Trump on Tuesday (July 1) said that the US and India will soon seal a trade deal with significantly lower tariffs, one that will help American companies compete in the South Asian market.

“I think we are going to have a deal with India, and it’s going to be a different kind of deal,” Reuters quoted the US president as saying.

“It will allow us to compete. Right now, India doesn’t accept anybody in. But if that changes, we’ll have a deal with much less tariffs,” he said.

Also read: After signing pact with China, Trump hints at ‘very big’ trade deal with India

The US president said that he believes India is ready to lower trade barriers for US companies. If the same happens, it may help India avert the 26 per cent tariff announced by the Trump administration that is on hold till July 9.

Earlier, US Treasury Secretary Scott Bessent had told Fox News that India and the US are close to sealing a deal that would reduce taxes on American goods being exported to India and help India avert steep tariffs too.

Indian team in US

An Indian delegation led by special secretary in the Department of Commerce Rajesh Agarwal is currently in the US to work out the trade pact. India is said to have hardened its position on agricultural duty concessions to America.

Officials have told the media that both sides are rushing to close the deal before the July 9 deadline, after which the 26 per cent reciprocal tariff imposed by the Trump administration and held since April, will kick in.

Also read: Trump has ‘no plans’ to pause tariffs beyond July 9; letters will go out ‘pretty soon’

The 26 per cent tariffs are likely to be implemented if the talks fail.

India’s firm stance on agriculture

On April 2, the US imposed an additional 26 per cent reciprocal tariff on Indian goods but suspended it for 90 days. However, the 10 per cent baseline tariff imposed by America remains in place. India is seeking full exemption from the additional 26 per cent tariff.

The US is demanding duty concessions in both the agriculture and dairy sectors. But these segments are difficult and challenging areas for India to give duty concessions to the US, as Indian farmers are into sustenance farming and have small land holdings.

Therefore, these sectors are politically very sensitive.

Also read: Trump and Modi share strong ties, both nations close to trade deal: White House

India has not opened up the dairy sector for any of its trading partners in any free trade pacts the country has signed so far.

Demands for duty concessions

The US wants duty concessions on certain industrial goods, automobiles – especially electric vehicles, wines, petrochemical products, dairy, and agricultural items like apples, tree nuts, and genetically modified crops.

India is seeking duty concessions for labour-intensive sectors like textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas in the proposed trade pact.

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The two countries are also looking to conclude talks for the first tranche of the proposed bilateral trade agreement (BTA) by fall (September-October) this year. The pact is aimed at more than doubling bilateral trade to USD 500 billion by 2030 from the current USD 191 billion.

Before the first tranche, they are trying for an interim trade pact.