India, US race to finalise interim trade deal ahead of July deadline

India and the United States are engaged in high-level negotiations this week to finalise an interim trade agreement focused on tariff reductions in key sectors such as agriculture and automobiles, two Indian government sources confirmed.

The discussions are seen as a significant step toward strengthening bilateral trade ties ahead of a self-imposed July 9 deadline set by US President Donald Trump, Caliber.Az reports, citing foreign media.

A US delegation, led by senior officials from the Office of the United States Trade Representative (USTR), began two days of closed-door talks in New Delhi on June 5 with Indian trade negotiators, headed by Chief Negotiator Rajesh Agrawal.

"During the current round of talks, negotiators are discussing tariff cuts on specific sectors including agriculture and autos, and proposed benefits for Indian companies," one Indian government source said.

A formal announcement of the deal is expected by the end of June, potentially as early as June 8, once the current round of meetings concludes. “The deal may be formally announced by month end, before the self-imposed deadline of July 9 by President Trump, but a statement is expected once meetings wrap up, possibly by Sunday,” a second official noted.

Trade Minister Piyush Goyal, currently attending events in Italy, may return to New Delhi to join the discussions, the source added.

Due to the sensitivity of the talks, all officials spoke on the condition of anonymity. India’s Ministry of Commerce has not yet commented on the ongoing negotiations.

In Washington earlier this week, US Commerce Secretary Howard Lutnick said that trade negotiations with India were advancing positively. “Trade negotiations were progressing and a deal could be finalised soon,” he stated.

The two countries agreed in February to pursue a phased deal with the ambitious goal of increasing bilateral trade to $500 billion by 2030. In 2024, trade between India and the US—India’s largest trading partner—rose to $129 billion, with New Delhi registering a $45.7 billion surplus.

India, encouraged by recent trade agreements with the United Kingdom and ongoing discussions with the European Union, is reportedly resisting American demands to open its agricultural and dairy sectors due to potential domestic backlash. “We are ready to offer a better deal than the UK pact, with average tariffs down to 10 per cent, matching the US base rate, and near-zero duties with quotas in exchange for market access and supply chain linkages,” a third official said.

The United States has voiced concern over India's high average farm tariffs, which stand at around 39 per cent, with some duties reaching as high as 45–50 per cent. Washington is also pressing New Delhi to allow corn imports for ethanol production as part of the broader trade discussions.

By Vafa Guliyeva