India, US inch closer to mini trade deal as talks enter day 5 to bridge gaps

Indian Prime Minister Narendra Modi with US President Donald Trump

India and the United States are inching closer to finalising a mini trade deal, with negotiations intensifying ahead of a July 9 deadline, sources said.

Talks have been extended again entering its fifth day now, and a fresh team of Indian negotiators, including subject-matter experts, may soon fly to Washington to draft the final contours of the agreement, if outstanding issues are resolved, sources added.

“Discussions are ongoing, the idea is to keep talking to ensure we get a trade deal. However, till it is done, it is not done,” one of the sources said, adding that India remains firm on not allowing sweeping access to US farm and dairy goods as well as genetically modified (GM) crops.

India is also pushing for significant tariff concessions for its labour-intensive exports such as textiles, leather and footwear, this source added.

The Indian team of negotiators led by commerce ministry’s special secretary Rajesh Agarwal are likely to stay in the US till a breakthrough is achieved. Initially, the delegation was scheduled to hold talks for two days since they arrived in Washington on June 27.

The subject matter experts who may join the Indian team currently in US, typically are responsible for giving a final shape to the trade deal.

Moneycontrol reported on June 30 that if the negotiations fail to reach a breakthrough, Indian exports could face a 26 percent reciprocal tariff from the US.

The US has also been reluctant to fully exempt India from Trump's steeper sectoral tariffs, as well as on the baseline levy.

It plans to impose 26 percent reciprocal tariffs on India, out of which a 10 percent baseline duty has already been implemented.

There is also a steep 50 percent sectoral levy on steel and aluminium, and a 25 percent duty on certain automobiles and auto parts.

India has been trying to negotiate a scaled-down version of the first tranche of a Bilateral Trade Agreement (BTA) with the US to ensure that it escapes the ire of US President Donald Trump's reciprocal tariffs, scheduled to be re-imposed from July 9.

The deadline for a more comprehensive BTA is Fall of this year.

US President had on April 2 imposed reciprocal tariffs on select countries, but reversed his decision on April 9 for a blanket 10 percent duty on all imports entering American shores.

Trump and other US officials have indicated they expect to clinch trade deals with many other countries soon, including India.