In a significant breakthrough, India and the United States are likely to have locked terms for an interim trade agreement, with a formal announcement likely just ahead of the July 10 deadline when steep U.S. tariffs on Indian exports could be enforced.
Officials confirmed that the 26% additional tariffs, initially paused by the Trump administration in April as a goodwill gesture, could now be permanently withdrawn if the deal goes through. The negotiations, led by Rajesh Agrawal, Special Secretary in India’s Department of Commerce, are focused on delivering a calibrated “mini deal” that avoids politically sensitive sectors while creating room for larger trade cooperation in the near future.
The interim package is expected to cover limited tariff relief, market access enhancements, and resolution of select non-tariff barriers. The US has demanded duty reductions on electric vehicles (EVs), wine, petrochemicals, and farm goods like apples, almonds, and cranberries. India is seeking relief on exports such as textiles, shrimp, gems and jewellery, leather goods, plastics, and grapes. A few high-value American goods, including Harley-Davidson motorcycles and select medical equipment, may receive import concessions or be placed under tariff rate quotas (TRQs). Entry of some U.S. farm products like turkey and pork may be permitted in small volumes, but India’s dairy and genetically modified crop sectors remain firmly off the table.Additionally, the mini deal is expected to include India’s deferral of certain digital taxation measures that target large American tech companies—a point of contention in past trade rounds.
The agreement comes as President Donald Trump prepares to enforce broader reciprocal tariffs on several U.S. trading partners beginning July 9. In recent speeches, President Trump has reiterated his intent to dismantle trade barriers globally and has repeatedly described U.S.-India trade as “full of untapped potential.” The deal would offer the Trump administration a concrete win ahead of its broader trade overhaul agenda and align with its aggressive push for American manufacturing and farm exports.
Trump is expected to visit India in early 2026, where both sides may formally resume negotiations for a full-scale Bilateral Trade Agreement (BTA). Sources say the first tranche of that larger pact could take shape by October 2025, building on the political capital and goodwill generated by this early breakthrough.
Trade observers note that the mini deal is structured to buy time, offer mutual wins, and avoid flashpoints—especially in India’s politically sensitive sectors. “This is a deal crafted with surgical precision. It protects India’s core interests while offering the U.S. real commercial access,” said a senior Indian negotiator.
By locking the mini deal now, both governments are expected to defuse short-term trade tensions, avert export disruptions, and pave the way for more ambitious negotiations in 2026.
