India-US trade pact likely before July 9; certain issues still pending in agri, auto sectors

New Delhi: An Indian team has returned from Washington after holding talks with the US on an interim trade pact, which is likely to be finalised before July 9, but discussions will continue as certain issues in the agri and auto sectors still need to be resolved, an official said.

The Indian team is led by chief negotiator Rajesh Agrawal. He is special secretary in the department of commerce.

The official said that the talks are in the last phase and its conclusion is expected to be announced before July 9, which marks the end of the 90-day suspension period of the Trump tariffs imposed on dozens of countries including India.

"Indian team is back from Washington. Negotiations will continue. There are certain issues which need to be resolved in agriculture and auto sectors," the official said.

India has raised issues over 25 per cent duty in auto sectors. It has taken up the matter in the Safeguards committee of the World Trade Organisation (WTO).

India has also informed the WTO that it has reserved the right to impose retaliatory duties on select US products in response to American tariffs on steel and aluminium.

On March 26, 2025, the US adopted a measure in the form of a tariff increase of 25 per cent ad valorem on imports of passenger vehicles and light trucks, and on certain automobile parts originating in or from India, a communication sent by India to WTO said.

The measure on automobile parts applies from May 3, 2025 and for an unlimited duration.

The US imported USD 89 billion worth of auto parts globally last year, with Mexico accounting for USD 36 billion, China for USD 10.1 billion, and India for just USD 2.2 billion.

In agriculture sector, the US is seeking duty concessions on products like dairy items, apples, tree nuts, and genetically modified crops.

However, being a politically sensitive sector, it will be difficult and challenging for India to provide any concessions in the agri sector.

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

India has hardened its position on giving duty concessions to American farm and dairy products.

The Indian team was in Washington for negotiations on an interim trade agreement with the US from June 26 - July 2.

These talks are important as the suspension of Trump's reciprocal tariffs is ending on July 9. The two sides are looking at finalising the talks before that.

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 also wants duty concessions on certain industrial goods, automobiles, especially electric vehicles, wines, and petrochemical products.

On the other hand, 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.

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.

The US team was here last month for the talks.

India's merchandise exports to the US rose by 21.78 per cent to USD 17.25 billion in April-May this fiscal, while imports rose by 25.8 per cent to USD 8.87 billion.