By Hopes for a long-awaited India-US trade deal have received a fresh boost after US President Donald Trump signaled a possible breakthrough, suggesting a pact with “much less tariffs” is on the horizon. Speaking aboard Air Force One on Tuesday, Trump said he expects the two countries to reach a mutually beneficial agreement soon — one that would significantly ease trade restrictions and open up markets.
“I think we are going to have a deal with India. And that is going to be a different kind of deal — one where we are able to go in and compete,” Trump said. He further warned that if India fails to reciprocate by reducing barriers, the United States will impose stricter tariffs. “Right now, India does not accept anybody in. I think India is going to do that, and if they don’t, we’re going to have a deal for much less tariffs,” he added.
July 9 Deadline Looms
The urgency in Trump’s remarks stems from a fast-approaching deadline — July 9 — when his administration’s proposed 26% tariff on a wide range of Indian exports is set to take effect. Trump had previously paused these punitive tariffs for 90 days, creating a narrow window for the two sides to strike a deal. With just days remaining, negotiations have intensified in Washington.
An Indian delegation led by chief negotiator Rajesh Agrawal is currently in the US capital, working around the clock to iron out the remaining hurdles. According to official sources, the Indian team has extended its stay in Washington in an effort to finalise the agreement before the July 9 cut-off.
“We are committed to reaching a fair and balanced trade agreement that benefits both countries,” a senior Indian official involved in the talks told reporters, requesting anonymity. “But certain red lines remain, especially in sectors like dairy, which are tied closely to domestic livelihoods.”
The Sticking Points
Despite overall progress, a few critical issues continue to block a final agreement:
- Dairy Sector Access: The United States has been pressing India to open its dairy market — a sector India has historically kept closed to all foreign countries. Washington sees this as a key demand, especially for American exporters of milk powders and dairy-based nutritional products.
- Agricultural Tariffs: US negotiators are also seeking reduced duties on products like apples, walnuts, almonds, and genetically modified (GM) crops. India has been reluctant to ease restrictions, citing concerns about domestic farmers and GM crop policies.
- Market Access for Indian Exports: On its part, India wants enhanced access for its textile and garment exports, as well as for gems, jewellery, leather goods, and agricultural products like shrimp, bananas, grapes, and oilseeds. Officials say the US side is reviewing these demands.
- Digital Trade and Data Regulation: While not highlighted in public statements, insiders suggest that US tech firms have pushed for relaxed data localization rules, a sensitive issue for Indian regulators.
High Stakes for Both Economies
A failure to reach consensus by July 9 would trigger the imposition of steep US tariffs on Indian goods, severely affecting India’s exports and potentially reigniting trade tensions. The Indian economy, which is showing early signs of recovery from inflationary pressure and global headwinds, cannot afford a disruption in its top trading relationship.
On the US side, the Biden administration — while publicly backing the Trump-brokered talks for continuity — is keen to demonstrate that Washington can still deliver major trade breakthroughs in the Indo-Pacific.
India-us currently enjoy a robust trade relationship, with total trade volume touching nearly $132 billion in FY25. Both countries have deepened cooperation in areas such as defense, energy, space, and technology. However, the absence of a formal trade agreement has been a long-standing gap in their strategic partnership.
Industry Reaction
India’s export industry is watching the negotiations closely. “The apparel sector alone could benefit significantly from tariff concessions, especially in a price-sensitive US market,” said a spokesperson from the Federation of Indian Export Organisations (FIEO). At the same time, dairy cooperatives and farmer lobbies are urging the government not to compromise rural livelihoods for short-term trade gains.
Conclusion
With less than a week to go before Trump’s tariff ultimatum kicks in, the India-US trade negotiations stand at a critical juncture. President Trump’s latest comments offer a sliver of hope, but much depends on whether both sides can bridge key differences in the coming days.
If successful, the deal could mark a turning point in India-US economic ties, enhancing trade flows, reducing tariffs, and reaffirming the strategic alignment between the world’s two largest democracies.
