High Stakes, Hard Bargains: India-U.S. Trade Talks Near Breaking Point

Image Source: Business Standard

Trade negotiations between India and the United States are at a critical juncture, with both sides struggling to resolve key disputes before the July 9 deadline, when steep reciprocal tariffs could take effect. The main sticking points center on duties for farm goods, steel, and auto components, with each country holding firm on its priorities.

Key Highlights:

Agriculture at the Center: The U.S. is pressing India to make deep tariff cuts on agricultural imports like corn, soybean, wheat, and ethanol. India is resisting, citing the need to protect its large rural workforce and the risks posed by subsidized U.S. farm goods to local farmers.
Other Sensitive Sectors: The U.S. wants greater access to India’s markets for dairy, automobiles, pharmaceuticals, alcoholic beverages, and medical devices. Indian auto, pharma, and small-scale industries are lobbying for only gradual market opening, worried about competition from large American firms.
Steel and Auto Duties: India is seeking a rollback of the proposed 26% reciprocal tariff set to start July 9, as well as concessions on existing U.S. tariffs on Indian steel and auto parts. The U.S. has not agreed to these demands so far.
Negotiation Dynamics: Despite India offering some tariff reductions and preferential treatment for certain U.S. goods, officials say Washington has not reciprocated with substantive proposals. Both sides accuse each other of not making enough concessions.
Exporter Concerns: Indian exporters are worried about the impact of higher U.S. tariffs (including a 10% base tariff, 50% on steel and aluminum, and 25% on autos), as well as the looming 26% reciprocal duty.
No Rush for a Deal: Indian officials say they are not desperate for an interim deal and will not compromise on national interests, even if it means missing the July 9 deadline. Talks may now shift toward a broader agreement in the fall, rather than a rushed interim pact.
Next Steps: An Indian delegation is expected to visit Washington soon, but expectations for a last-minute breakthrough are low unless top leaders intervene directly.