US-India trade deal may cap tariffs below 20% as both sides continue talks

India may avoid steep US tariff demand letters as both nations work on interim trade deal; proposed pact could set base rate below 20 per cent with room for further negotiations

The US is in talks with India to finalise an interim trade agreement that could bring down proposed tariff rates to below 20 per cent, Bloomberg reported. This puts India in a better position compared to several of its regional peers who are facing higher levies.

 

Unlike many other countries that received official tariff demand letters this week, India does not expect one. Instead, the agreement is likely to be announced through a joint statement, the report said.

 

This interim deal is expected to create room for further negotiations, giving New Delhi time to settle pending issues before a more comprehensive agreement is announced later this year, Bloomberg reported.     

 

 

Tariff may be set below 20%

 

The joint statement may fix a base tariff level of under 20 per cent — down from the initially proposed 26 per cent. The language of the statement is expected to keep the door open for continued talks on the final tariff rates. While the exact timeline of the interim deal remains uncertain, such a development would put India among a small group of nations that have reached trade understandings with the Trump administration, Bloomberg reported.

 

India seeks better terms than Vietnam

 

President Donald Trump has announced tariffs of up to 50 per cent for many countries, ahead of an August 1 deadline. In contrast, India is aiming to negotiate better terms than those given to Vietnam, which agreed to a 20 per cent duty rate but is now trying to lower it. So far, the UK and Vietnam are the only countries Trump has named as having trade deals in place.

 

In an interview with NBC News on Thursday, Trump said he is considering "blanket tariffs" of 15 per cent to 20 per cent on most trading partners who have not yet been notified of their rates. At present, the global base rate for US tariffs on most countries is 10 per cent.   

 

  So far, Asian countries have seen a wide range of announced tariffs — from 20 per cent for Vietnam and the Philippines to 40 per cent for nations like Laos and Myanmar.

 

India pushes for concessions, but challenges remain

 

India was among the first countries to approach Washington for trade talks this year. Although Trump recently said that a deal with India is “close”, he also warned of additional tariffs, pointing to India’s role in the Brics alliance.

 

A delegation of Indian negotiators is expected to travel to Washington soon to continue discussions. According to earlier reports by Bloomberg News, India has already made its best possible offer and has outlined clear boundaries on issues it is not willing to compromise on.

 

Key sticking points still unresolved

 

However, some difficult issues still remain. One major sticking point is the US demand that India open its markets to genetically modified (GM) crops — a request New Delhi has resisted, citing the potential risks to Indian farmers.

 

Disagreements also continue on non-tariff barriers in agriculture and regulatory standards in the pharmaceutical sector, Bloomberg said.