India is close to finalising an interim free trade agreement with the United States, with sources indicating that a formal announcement could be made by September or October. Indian negotiators returned from Washington on Saturday following the fifth round of bilateral discussions.
A delegation of US officials is expected to visit India in mid-August as both sides aim to conclude a provisional trade deal before President Donald Trump’s August 1 deadline for imposing additional tariffs. US Commerce Secretary Howard Lutnick, in a televised interview last week, reaffirmed that the tariff deadline is firm. “They’re going to start paying the tariffs from August 1,” he said.
Sources suggested that even if a full interim deal is not reached before the deadline, a ‘mini deal’ may be concluded in time to help India avoid the steep 26 per cent tariffs announced in April. These proposed duties target sectors like steel, aluminium, and automotive components—areas where India has significant export volumes to the US.
Negotiations have also covered agriculture and automobile trade, with India reportedly holding a firm stance against duty concessions in the dairy sector. Sources noted that India has never extended such dairy concessions under any free trade agreement so far.
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In the discussions, India has requested the removal of both the additional 26 per cent tariff and the existing base tariffs of 50 per cent on steel and aluminium, along with 25 per cent on automotive exports. Further relief has been sought for labour-intensive sectors such as textiles.
On the other hand, the US has pressed for reduced tariffs on certain industrial goods and vehicles—particularly electric vehicles—along with wines, petrochemicals, and agricultural products.
India has also made clear it reserves the right under World Trade Organisation norms to impose retaliatory tariffs on American goods if needed. Notably, India has not yet taken retaliatory action, unlike China and the European Union, which have already imposed counter-measures in response to the Trump administration’s tariff regime.
Last month, President Trump had expressed optimism about the deal, stating, “We’re going to have access to India… We’re getting access now because of the tariffs.”
Government sources have dismissed reports that the US has imposed conditions on the ongoing talks. They maintained that India’s economic and trade interests would remain fully safeguarded throughout the negotiation process.
During April to June this fiscal year, India’s merchandise exports to the United States rose 22.8 per cent to $25.51 billion, while imports increased by 11.68 per cent to $12.86 billion.
India-UK FTA Set for July Signing
Meanwhile, India is also moving forward on another trade front. Prime Minister Narendra Modi is expected to sign a free trade agreement with the United Kingdom during his July 23–24 visit, accompanied by Commerce Minister Piyush Goyal. The India-UK agreement includes duty reductions on nearly 99 per cent of Indian exports and exempts 90 per cent of UK imports from duties.
