Hectic negotiations between India and the U.S. enter the sixth day on Tuesday (July 1, 2025) in Washington, with the talks reaching an important stage and New Delhi demanding better market entry for its labour-intensive items, an official mentioned.
The Indian staff, headed by Special Secretary within the Department of Commerce Rajesh Agrawal, is in Washington for negotiations on an interim trade settlement with the U.S.
The keep of the Indian officers has been prolonged. Initially, the delegation was scheduled to remain for two days, with the talks having commenced on June 26.
These talks are additionally vital because the suspension date of Mr. Trump’s reciprocal tariffs is approaching. It will finish on July 9. The two sides are taking a look at finalising the talks earlier than that, the official mentioned.
India has hardened its place on giving duty concessions to American farm merchandise. It is searching for duty concessions for its labour-intensive items reminiscent of textiles, engineering, leather-based, gems and jewelry.
“If the proposed trade talks fail, the 26% tariffs will come into force again,” the official added.
On April 2, the U.S. imposed an extra 26% reciprocal tariff on Indian items however suspended it for 90 days. However, the ten% baseline tariff imposed by America stays in place. India is searching for full exemption from the extra 26% tariff.
The U.S. is demanding duty concessions in each the agriculture and dairy sectors. But these segments are tough and difficult areas for India to provide duty concessions to the U.S. as Indian farmers are into sustenance farming and have small land holdings.
Therefore, these sectors are politically very delicate.
India has not opened up the dairy sector for any of its buying and selling companions in free trade pacts the nation has signed up to now.
The U.S. needs duty concessions on sure industrial items, vehicles, particularly electrical automobiles, wines, petrochemical merchandise, dairy, and agricultural gadgets like apples, tree nuts, and genetically modified crops.
India is searching for duty concessions for labour-intensive sectors like textiles, gems and jewelry, leather-based items, clothes, plastics, chemical compounds, shrimp, oil seeds, grapes, and bananas within the proposed trade pact.
The two international locations are additionally seeking to conclude talks for the primary tranche of the proposed bilateral trade settlement (BTA) by fall (September-October) this 12 months. The pact is aimed toward greater than doubling bilateral trade to $500 billion by 2030 from the present $191 billion.
Before the primary tranche, they’re making an attempt for an interim trade pact.
The U.S. staff was right here from June 5 to June 11 for the talks. The negotiations will proceed each nearly and bodily within the days to return.
India’s merchandise exports to the U.S. rose by 21.78% to $17.25 billion in April-May this fiscal, whereas imports rose by 25.8% to $8.87 billion.
Commenting on India’s demand, suppose tank Global Trade Research Initiative (GTRI) mentioned that as talks for the pact reaching a essential stage, India is pushing laborious for full tariff elimination on high-employment exports reminiscent of clothes, footwear, carpets, and leather-based items.
Without this reduction, the deal might be politically unsellable at dwelling, GTRI Founder Ajay Srivastava mentioned, including Washington seems unwilling to scrap excessive MFN (most favoured nation) tariffs or country-specific duties.
Under present proposals, Indian items might face a ten% surcharge on prime of MFN charges, eroding competitiveness and successfully reversing market entry good points, he mentioned.
Merchandise exports to the U.S. rose to $86.5 billion in FY25, up 11.6% from $77.5 billion in FY24.
Industrial items account for the majority of this trade, with labour-intensive exports forming a major share.
“However, without fast-track trade authority, Washington is unable to cut its MFN [Most Favoured Nation] tariffs across the board. Worse still, U.S. appears to be in no mood to exempt country specific tariffs and just bring it down to 10%,” Mr. Srivastava mentioned.
This danger, he mentioned, is especially acute for excessive labour-intensity sectors, which contributed over $14.3 billion to India’s exports to the U.S. in FY25.
These embrace clothes ($5.33 billion), textiles and carpets ($2.38 billion), made-ups and worn clothes ($2.95 billion), leather-based ($795 million), footwear ($461 million), ceramics and stoneware ($1.55 billion), and wooden and paper articles ($823 million).
These sectors are dominated by small and medium enterprises and are main employment turbines in Indian states reminiscent of Uttar Pradesh, Tamil Nadu, Gujarat, and West Bengal. Yet, they face a number of the steepest U.S. tariffs — typically ranging between 8 and 20%, particularly for clothes and footwear.
He added that India’s demand is evident that the U.S. should take away all tariffs — each MFN and country-specific — on excessive and medium labour-intensive items.
He added that these sectors make use of tens of millions, significantly in rural and semi-urban areas, and are essential to India’s objectives of job creation, MSME development, and girls’s financial participation.
“Without meaningful tariff relief for these products, Indian negotiators warn, the FTA will be viewed as lopsided and politically untenable,” Mr. Srivastava mentioned.
