The next round of talks between India and the United States for an interim or ‘mini deal’ began in New Delhi on June 5 – a day when the fresh 50 percent tariffs on steel and aluminium announced by US President Donald Trump kicked in.
New Delhi is navigating the deal in a "measured and expeditious" manner as multiple developments – ranging from a further hike in metal tariffs, to rulings by US courts, to India formally objecting to some of the Trump tariffs at the World Trade Organisation (WTO) – have made negotiations far more complex now.
"The last round of talks happened in Washington until May 22 and in just two weeks, the situation has become far more complex. There is a lot of uncertainty now. But India has to find pathways which are good for the country," said an official from the commerce ministry who is privy to the talks.
Moneycontrol had earlier reported that the next round of talks on an interim deal with the US will be held on June 5 and 6 in New Delhi.
Comprehensive deal may happen next year
With the July 8 deadline for reciprocal tariffs just five weeks away, India is looking to conclude a mini deal by the end of June. In this deal, India wants to be exempted not only from the 26 percent overall tariffs, but also from the 50 percent duties on steel and aluminium – like Britain has been. Washington wants greater access to the Indian market for industrial goods and some farm products. Besides, a few non-tariff barriers may also be addressed.
A broader deal might be announced anytime between September and November, while a final comprehensive bilateral trade agreement (BTA) will likely happen next year, according to ministry officials.
In February, Trump and Prime Minister Narendra Modi announced plans to negotiate the first tranche of a multi-sector BTA by fall (September-October) 2025.
The BTA is aimed at more than doubling the bilateral trade to $500 billion by 2030 from $191 billion at present.
US energy and edible oil
India is considering increasing its energy and edible oil imports from the US amid the sweeping tariffs.
"Exports are increasing... there are several things we can buy from the US... For example, shale gas, LNG, crude oil. The more diversified our sources, the greater the benefit for us. Prices are also low in the US," said a commerce ministry official requesting anonymity.
The US is seeking increased market access for its agri products, especially soya and corn – two of its top exports to China. To that end, India may reduce duties on apples, tree nuts, and some dairy items.
Automobiles a sticking point
Automobiles, especially electric vehicles (EVs), will be another point of contention as Washington has repeatedly flagged the high duties imposed by New Delhi. India will also push the Trump administration to lower the 25 percent auto tariffs it has imposed.
On June 2nd, barely three days ahead of the talks, India rolled out a revamped EV scheme. This allows companies to import a limited number of electric cars at a lower duty of 15 percent, if they commit to investing Rs 4,150 crore to manufacture such cars in India within three years from approval.
A day later, on June 3, India toughened its stance and formally challenged the US on its steep auto tariffs by raising the matter with the WTO. India stated that the 25 per cent duties imposed by the US on passenger vehicles, light trucks, and specific auto parts constitute a "safeguard measure," intended to protect US producers from a perceived import surge.
Defence a new entrant
Speaking at the US-India Strategic Partnership Forum (USISPF) in Washington DC on June 3, US Secretary of Commerce Howard Lutnick said, “There were certain things that the Indian government did that rubbed the United States the wrong way. For instance, they generally buy military gear from Russia. That’s a way to kind of get under the skin of America, if you go to buy your armaments from Russia.”
He said India is already “addressing” this issue, indicating that India is likely to expand the scope of its defence imports from the US. Russia accounts for 36 percent of India's defence equipment imports, and the country is also intensifying its domestic production. India has also been importing arms from France and Israel.
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