Efforts to finalize a major trade pact between India and the United States have intensified following a significant trade arrangement between the US and Vietnam. With a deadline of July 9 approaching, both countries are racing to conclude an interim agreement that could prevent the imposition of higher tariffs on each other's goods.
The US-Vietnam agreement, announced on July 2, reduced planned US tariffs on Vietnamese products to 20 percent and granted duty-free access for American exports to Vietnam. The deal also imposed a 40 percent tariff on Chinese goods routed through Vietnam. This breakthrough has set a precedent for similar negotiations with other trade partners, including India.
Negotiators from India and the US are now working to finalize a deal that will cover tariff reductions on a range of goods. India is reportedly open to lowering tariffs on American exports such as walnuts, cranberries, medical devices, automobiles, and energy products. However, India remains firm in protecting its agricultural and dairy sectors, which it considers politically and economically sensitive. Genetically modified crops like corn, soybeans, rice, and wheat have been explicitly ruled out of the deal by Indian authorities.
Sources indicate that the US is pressing for broader market access for its goods and services, while India is seeking relief from impending US tariffs, which could rise from 26 to 27 percent if no agreement is reached. Finance Minister Nirmala Sitharaman reaffirmed India's position, stating that agriculture and dairy are non-negotiable areas in the current talks.
The US administration believes a deal is within reach and has instructed its team to prepare for a possible announcement. While some sources anticipate a limited agreement by July 9, it is expected to be a first phase, with more complex issues like steel, auto components, and biotechnology to be addressed in subsequent discussions.
Indian stock markets have responded positively to the progress, with benchmarks such as the Nifty 50 and BSE Sensex registering gains. The Indian rupee has also strengthened in forward markets amid growing optimism over a potential deal and weaker economic data from the US, which may prompt future rate cuts by the Federal Reserve.
The successful conclusion of the India-US trade pact could mark a new phase in bilateral economic ties and help both countries navigate growing global trade tensions. However, the outcome hinges on how well both sides manage their domestic political sensitivities while securing mutual economic benefits.