Agri concessions may delay India-US trade deal as Trump's July 8 deadline looms

The US has reportedly been pushing hard for tariff concessions and opening up the Indian markets for dairy and agricultural items like genetically modified crops, apples and nuts.

New Delhi: Bilateral trade agreement between India and the US seems unlikely to be signed by the July 8 deadline, which marks the end of President Donald Trump’s 90-day suspension of the so-called “liberation day” tariffs, creating renewed uncertainty for exporters.

According to sources, agricultural goods remain the key sticky issue. The US has been pushing hard for tariff concessions and opening up the Indian markets for dairy and agricultural items like genetically modified crops, apples and nuts.

So far, India has not budged on these issues. Concession on agricultural items is not part of any of the trade deals signed by India so far.

“For us, the priority is protecting India’s interest,” said a government source.

An Indian delegation led by special secretary in the Department of Commerce and India’s chief negotiator Rajesh Agrawal is in the US to take forward the negotiations.

This comes amid claims by Trump that the US may have a “very big” trade deal.

“Everybody wants to make a deal and have a part of it. Remember a few months ago, the press was saying, 'You really have anybody of any interest? Well, we just signed with China yesterday. We are having some great deals. We have one coming up, maybe with India. Very big one,” Trump said at the White House on Thursday. 

According to analysts, India and the US may opt for a “mini-deal” in line with the US-UK deal announced in May. The mini-deal, if concluded, is likely to focus on tariff reductions and strategic commitments, leaving broader free trade agreement (FTA) issues—including services trade, intellectual property rights and digital regulations—for a future negotiation.

Under the mini-deal, India may agree to lower tariffs on a wide range of industrial goods, including automobiles and petrochemical products.

However, New Delhi is unlikely to budge on the farm sector, which is politically and economically sensitive, affecting over 70 crore people in India’s rural economy.

Any substantial agreement on the farm sector looks unlikely unless there is political push from the top level of the two countries. However, India may offer limited market access through tariff reductions and tariff-rate quotas (TRQs) on select US products such as ethanol, almonds, walnuts, apples, raisins, avocados, olive oil, spirits and wine.

 “Any trade deal with the US must not be politically driven or one-sided, it must protect our farmers, our digital ecosystem, and our sovereign regulatory space,” said Ajay Srivastava, founder, Global Trade Research Initiative (GTRI).

EEPC India Chairman Pankaj Chadha said the India-US trade deal should include the sectoral tariffs like steel, aluminium and auto parts, as it is crucial for engineering goods exports, which account for nearly one-fourth of India’s total merchandise exports.

The July 8 deadline is significant to have a mini-deal. This deadline marks the end of Trump’s 90-day suspension of the “Liberation Day” country-specific tariffs.

“If no agreement is reached by then, India faces renewed tariff uncertainty, though observers see a reimposition as unlikely,” GTRI said in a note.

Beyond tariffs, the US is expected to press India for large-scale commercial purchases, including oil, liquefied natural gas (LNG), aircrafts and nuclear reactors. There may also be pressure on India to ease FDI restrictions in multi-brand retail, potentially benefiting firms like Amazon and Walmart.

In return, the US is likely to refrain from reimposing the controversial 26% country-specific tariffs on Indian goods, which were announced by Trump on April 2. Instead, a 10% baseline tariff may apply to most imports from India.

Prime Minister Narendra Modi 

Highlights - Tough negotiations
US wants its dairy and agricultural items like GM crops, apples and nuts to flow into India, but New Delhi not budging
Therefore, both nations may opt for a “mini-deal” on the lines with the US-UK deal, focusing on tariff reductions
Under mini-deal, India may agree to lower tariffs on industrial goods, including automobiles and petro products
India may offer limited market access through tariff reductions and tariff-rate quotas on select US products such as ethanol, almonds, walnuts
Beyond tariffs, the US is expected to press India for large-scale commercial purchases, including oil, LNG and nuclear reactors

Quote - Any trade deal with the US must not be politically driven or one-sided it must protect our farmers our digital ecosystem and our sovereign regulatory space - Ajay Srivastava founder Global Trade Research Initiative