Key Highlights:
- US mulls reducing Indian tariffs to under 20 percent through an interim deal
- Final agreement expected by end of July; key issues still unresolved
- India avoids formal tariff hike unlike many other Asian countries
India may be in line for a major trade relief as the United States is reportedly considering an interim trade agreement that could reduce the proposed tariffs on Indian goods to below 20 percent, down from the current 26 percent. This development, reported by Bloomberg citing unnamed sources, comes amid ongoing negotiations between the two countries.
A deal, if finalised, could place India among a select group of nations enjoying reduced tariffs under the Trump administration's newly announced trade framework.
Interim Deal Expected Soon
The interim trade deal under discussion would not serve as a final resolution but rather allow both sides to continue negotiations on remaining issues. It is expected to set a baseline tariff below 20 percent, instead of the current 26 percent, which includes a 10 percent base duty and a 16 percent additional duty.
The timing of the announcement remains uncertain. However, sources say the agreement will likely be shared through a joint statement rather than a formal tariff notification, giving both governments the flexibility to continue refining the details.
The previous July 9 deadline to finalise the deal has been extended, with negotiators hopeful for a conclusion by end of July.
Strategic Relief Amid Rising Global Tariffs
India is seen as less likely to receive a formal tariff demand letter, unlike many other countries. This would make India part of a smaller group of partners who have struck a favorable deal with Washington. In contrast, countries like Vietnam and the Philippines have received 20 percent tariffs, while Laos and Myanmar face rates up to 40 percent.
President Trump has proposed blanket tariffs of 15 percent to 20 percent for countries yet to be informed, adding pressure on global trading partners ahead of the August 1 deadline.
Trump has also hinted at further penalties for countries participating in the BRICS group, potentially escalating tensions.
Road Ahead for Negotiations
An Indian delegation is expected to travel to Washington soon to further the talks. While India has presented its best offer, significant gaps remain, particularly around non-tariff barriers in agriculture and pharmaceutical regulations.
Until a deal is finalised, India’s tariffs will remain at the existing 26 percent rate.
