As the deadline for the United States’ 90-day tariff suspension on imports from multiple countries—including India—approaches, pressure is mounting on Washington to finalize an interim trade deal with New Delhi. According to sources close to the matter, India has firmly outlined its red lines, particularly in sensitive sectors like agriculture and dairy, leaving the next move to the United States.
Negotiations for the proposed India-US interim trade agreement 2025 have entered a decisive phase. With just days left before July 9, 2025, which marks the expiration of the US-imposed tariff suspension, both nations are pushing to finalize the deal. However, Indian officials have emphasized that New Delhi will not compromise its national interests, especially regarding tariff concessions in sectors critical to domestic livelihoods.
Sources familiar with the talks revealed that India has communicated its final position on agriculture and dairy-related provisions, which remain sticking points in the negotiations. This puts the ball squarely in Washington’s court. “India has drawn a Laxman Rekha [red line]. It’s now up to the US to respond,” a senior official told our correspondent.
Bilateral trade discussions between the two nations officially resumed in February 2025, with an aim to develop a comprehensive Bilateral Trade Agreement (BTA). The target is to conclude the first phase of the BTA by September–October 2025. However, ahead of the broader agreement, both sides have been trying to hammer out an interim trade pact to avoid the reimposition of retaliatory tariffs.
On April 2, 2025, the United States imposed an additional 26% countervailing duty on Indian exports, although it was temporarily suspended for 90 days. The original 10% basic duty remains in effect, and India has requested a full waiver of the 26% surcharge. Failure to reach a consensus by July 9 could see the reactivation of these punitive duties, affecting Indian exporters significantly.
India has consistently refused to open up its dairy sector to foreign competition in trade agreements. This is primarily due to the sector’s sensitivity, involving millions of small-scale farmers and dairy producers. Any tariff concession to the US could risk destabilizing the domestic market.
Trade experts highlight that this firm position is not new. India has never included dairy liberalization in any of its previous Free Trade Agreements (FTAs). Additionally, agricultural products remain a politically charged issue, with implications for food security, farmer welfare, and inflation control.
Union Commerce and Industry Minister Piyush Goyal recently reiterated India’s position, stating that “India does not sign trade deals based on arbitrary deadlines.” He further emphasized that the country would only agree to the trade pact if it serves the nation’s long-term economic and strategic interests.
This statement reflects India’s growing assertiveness in global trade negotiations, focusing on mutually beneficial outcomes rather than succumbing to pressure tactics.
Apart from agriculture and dairy, the two nations remain at odds over tariff barriers on steel and aluminum products, which currently face duties up to 50%, and automobiles, which attract a 25% US tariff. Both sides have shown some willingness to negotiate, but consensus remains elusive.
Indian negotiators returned from Washington last week after holding several rounds of talks on the interim agreement. While some progress has been made, the contentious tariff structure continues to hamper finalization.
The suspense builds as July 9 nears, the day when US President Donald Trump’s 90-day tariff waiver policy concludes. President Trump has already indicated that his administration will begin informing 10–12 countries about new tariff schedules, suggesting that the US is prepared to reinstate the previously suspended duties.
Should no deal be reached, Indian exporters could once again face significant barriers in the US market, jeopardizing bilateral trade worth billions of dollars.
The India-US trade relationship is one of the most dynamic bilateral economic partnerships globally, with trade volume crossing $180 billion in 2024. However, recurring disagreements on market access, tariff regimes, and intellectual property rights continue to create friction.
From a political standpoint, both governments have reasons to finalize the interim agreement. President Trump faces mounting domestic pressure ahead of the 2026 US mid-term elections, where economic diplomacy will be scrutinized. On the Indian side, the ruling NDA coalition is keen to demonstrate diplomatic assertiveness while protecting domestic industries.
Sources also mentioned that both countries have formed specialized negotiation teams to resolve the bottlenecks. India’s delegation includes senior officials from the Ministries of Commerce, External Affairs, and Agriculture. On the American side, representatives from the Office of the United States Trade Representative (USTR) are leading the discussions.
If the remaining issues are resolved in the next few days, the India-US interim trade agreement may be announced before July 9. This would mark a significant breakthrough and pave the way for a comprehensive trade pact later in the year.
As it stands, India has clearly defined its stance, particularly on sensitive areas like agriculture and dairy. With New Delhi unwilling to yield further, the onus is now on Washington to take the final steps toward concluding the interim agreement.
The next few days will be crucial in shaping the trajectory of India-US trade relations in 2025. For now, both markets, exporters, and political analysts await an official announcement with bated breath.
This post was published on July 7, 2025 17:50
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