India-US Interim Trade Deal Unlikely as Tariff Deadline Nears: Sources

The likelihood of an interim trade deal between India and the United States before Washington's August 1 tariff deadline appears increasingly slim, as negotiations remain gridlocked over contentious issues, particularly tariff cuts on key agricultural and dairy products, according to two Indian government sources.

US President Donald Trump had threatened to impose a 26% tariff on Indian imports in April but temporarily suspended its implementation to facilitate ongoing discussions. This pause is set to expire on August 1. While over 20 other countries have already received formal tariff letters, India has yet to receive one, hinting at the complexity and sensitivity of the ongoing talks.

India's trade delegation, led by chief negotiator Rajesh Agrawal, recently returned from Washington after the fifth round of talks concluded without a significant breakthrough. "An interim deal before August 1 looks difficult, though virtual discussions are ongoing," one of the Indian government sources stated, adding that a US delegation is expected to visit New Delhi soon to continue the negotiations.

Sticking Points: Agriculture, Dairy, and Industrial Tariffs

The primary impediments to a swift resolution are India's steadfast refusal to open its politically sensitive agriculture and dairy sectors to US imports. Conversely, Washington is resisting India's demands for relief from higher tariffs on steel, aluminum, and automobiles. Officials are now exploring the possibility of deferring these contentious issues to a later stage, aiming to finalize an interim deal first.

Ajay Sahai, director general of the Federation of Indian Export Organizations (FIEO), expressed concern that sectors like gems and jewelry could be severely impacted if the 26% tariffs are indeed imposed. However, he maintained optimism, suggesting such measures might be temporary as both nations remain committed to a broader trade agreement over time.

US Prioritizes Quality Over Deadlines

Meanwhile, US Treasury Secretary Scott Bessent indicated that the Trump administration prioritizes the "quality" of trade agreements over their timing. Speaking to CNBC, Bessent noted that the decision to extend deadlines for countries engaged in talks ultimately rests with President Trump.

Despite the immediate challenges, Indian officials remain hopeful of securing a more comprehensive bilateral trade agreement by September or October, aligning with the understanding reached between Prime Minister Narendra Modi and President Trump in February. "Given that there have been five rounds of negotiations and another U.S. delegation is expected, we remain optimistic about finalizing a trade pact," a third government source commented, requesting anonymity due to the confidential nature of the negotiations.

The Indian commerce ministry and the US Trade Representative's Office have yet to respond to requests for comment.

Also Read: GMDC Share Zooms 7% - What's Fueling This Rare Earth Stock's Rally?