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Updated 4 July 2025 at 03:14 IST

India-US Trade Deal: Agriculture Likely To Be Exempted From Tariffs, Interim Deal Expected By July 8

India and US reportedly near interim trade deal, exempting agriculture from tariffs. Both countries work towards $500 billion trade goal by 2030. Deal expected before July 8.

Reported by: Abhishek Tiwari
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India-US Trade Deal: Agriculture Likely To Be Exempted From Tariffs, Interim Deal Expected By July 8
India-US Trade Deal: Agriculture Likely To Be Exempted From Tariffs, Interim Deal Expected By July 8 | Image: Republic

New Delhi: The trade negotiations between India and the United States are reportedly nearing an important deal, with both countries working towards finalising an interim trade agreement before July 8. According to government sources, the deal is likely to exempt the agriculture sector from tariffs, an important demand of the Indian government. The new trade deal with the US will come as a relief to Indian farmers and the agricultural industry, a topic of discussion which had been a sensitive issue in the trade talks.

As per sources, the trade negotiations between India and the US have been intense, with both sides engaging in focused discussions to facilitate greater market access, reduce tariff and non-tariff barriers, and enhance supply chain resilience and integration. India's Chief Negotiator Rajesh Agrawal led the trade delegation in the US to expedite the talks. Meanwhile, the latest development is expected to boost bilateral trade between the two nations, which has been growing steadily over the years. According to sources, the deal is likely to be announced ahead of the looming US tariff deadline.

The Indian government has made it clear that it will not compromise on the interests of its farmers and cannot open up the agriculture sector completely. However, limited access may be allowed for certain products like pecan nuts, walnuts, almonds, or Washington Apples from America. The exemption is crucial for India, as the agriculture sector is a major contributor to the country's economy and employs a large portion of the workforce.

Features Of Interim Trade Agreement

The interim trade deal is expected to cover critical sectors such as agriculture, automobiles, industrial goods, and labour-intensive products. The US is demanding duty concessions on agriculture and dairy products, while India is seeking concessions for its labour-intensive sectors like textiles, leather, and gems and jewellery. The agreement is likely to exempt agriculture from tariffs, a major concession for India, given the sector's importance to the country's economy and employment.

The US had imposed an additional 26% reciprocal tariff on Indian goods in April but suspended it for 90 days to keep the door open for trade negotiations. India is seeking full exemption from these additional tariffs, which would prevent a huge cost increase on Indian exports to the US. According to experts, sectors like textiles, jewellery, and footwear could see an export upside of $4-6 billion annually over three years if duty relief is phased in.

Challenges And Opportunities

The experts also suggested that though the trade deal is expected to benefit both countries, the challenges will remain. The US is pressing for tariff cuts on products like apples, tree nuts, and genetically modified crops, but India's government officials have declared dairy a 'red line'. India has not opened up the dairy sector for any of its trading partners in free trade pacts the country has signed so far. Despite these challenges, the deal is seen as a big step towards enhancing economic cooperation between the two nations.

The India-US trade deal is part of a broader vision to boost bilateral investment and ease capital movement between the two countries. As per the analysts, if both countries conclude an interim trade agreement, it could pave the way for a more comprehensive Bilateral Trade Agreement (BTA) by September or October 2025. The BTA seeks to more than double bilateral trade to $500 billion by 2030, up from the current $191 billion.

Further details regarding the ongoing trade negotiations are awaited. 

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Published 3 July 2025 at 22:44 IST