While India and the US remain keen on signing an interim deal before July 9 to avert the applicability of reciprocal tariffs, the official said that tariffs may revert to the pre-April 2 levels if a deal is not reached by the end of the pause on tariffs.
The official explained that the 26% reciprocal tariffs or the pre-April 2 position of 2.3% tariffs would still imply a relative advantage for India compared to other manufacturing economies.
On negotiations held between June 4 and June 10 in New Delhi, government sources had told CNBC-TV18 that in-depth talks were held on various areas such as market access, Sanitary and Phytosanitary Measures (SPS), Technical Barriers to Trade (TBT), digital trade, customs and trade facilitation, and the legal framework.
Sources indicated that negotiations with the American side were productive and helped in making progress towards crafting a mutually beneficial and balanced agreement, including through the achievement of early wins. Both sides had agreed to continue negotiations to achieve an expeditious conclusion of the initial tranche of the BTA.
India was negotiating with an American delegation led by the Assistant US Trade Representative Brendon Lynch in New Delhi. Both sides are engaged in focused discussions to facilitate greater market access, reduce tariff and non-tariff barriers, and enhance supply chain resilience and integration.
Earlier, Commerce and Industry Minister Piyush Goyal had said that India and the US intend to give preferential market access to businesses, even as both countries will continue working bilaterally to resolve issues such as tariffs on aluminium and steel. Sources had indicated that an interim deal seems possible before the first tranche of the proposed Bilateral Trade Agreement (BTA).
On May 21, government officials had indicated that India is aiming for full exemption from 26% additional tariffs in the interim trade deal being discussed with the United States, which is being aimed at before July 9 to avert the applicability of reciprocal tariffs, which are currently paused by the world’s largest economy.
Stating that goods and digital services are likely to be a part of an interim trade deal with the US, government officials had pointed out that the Trump administration doesn’t have the authority to bring tariffs lower than the MFN (Most-Favoured Nation) rate, which will require approval from the US Congress.
However, the US government can remove reciprocal tariffs for several countries, including India. The US is also seeking concessions in certain industrial goods, automobiles, wines, petrochemical products, dairy, and other agricultural products.
Officials had said that India is also aiming for a Minimum Import Price (MIP) or import quotas in sensitive sectors like dairy and agriculture as part of the deal, adding that India also wants the 5% to 7% Basic Customs Duty (BCD) to be cut for its exports of labour-intensive products like leather.
India and the US are looking to double their bilateral trade to $500 billion by signing the first tranche of a mutually beneficial multi-sector Bilateral Trade Agreement (BTA) by October 2025.