With just days remaining before the July 9 deadline set by the Trump administration, hopes of clinching an interim trade pact between Delhi and Washington remain alive—though increasingly mired in hard-nosed bargaining.
Despite upbeat signals—White House press secretary Karoline Leavitt recently suggested the deal was imminent, and Indian Finance Minister Nirmala Sitharaman said Delhi would welcome a “big, good, beautiful” agreement in response to Trump’s claim that a deal would soon “open up” the Indian market—negotiators remain locked in difficult talks.
Several sticking points persist, notably around agricultural access, tariffs on Indian steel, and auto component trade.
Indian officials have extended their stay in Washington for further negotiations. Even as Delhi holds firm on what it calls “very big red lines” on farm and dairy protections, while the US continues to push for wider market access. Optimism remains—but the window to reach a deal is narrowing.
“The coming week could determine whether India and the US settle for a limited ‘mini-deal’ or walk away from the table—at least for now,” says Ajay Srivastava, former Indian trade official and founder of the Global Trade Research Initiative (GTRI), a Delhi-based think tank.
The outcome hinges on a few key flashpoints—none more contentious than agriculture.
“There are two real challenges to concluding an initial agreement. First is US access to the Indian market for basic agricultural products. India will need to protect this sector for both economic and political reasons,” The Guardian quoted Richard Rossow, an expert on the Indian economy at the Centre for Strategic and International Studies (CSIS), Washington, as saying.
Washington has long sought greater access to India's farm sector, seeing it as a major untapped market. But India has defended it vigorously, citing food security, the livelihoods of millions of small farmers, and domestic political sensitivity.
Rossow identifies a second barrier: India’s non-tariff measures. “India’s growing array of Quality Control Orders (QCOs) present significant hurdles to US exports and will be tricky to address meaningfully in a trade pact.”
Over 700 QCOs—part of India’s 'self-reliant' industrial strategy—are aimed at curbing low-grade imports and boosting domestic manufacturing. But critics, including Niti Aayog’s Suman Berry, warn that they risk becoming a “malign intervention” that restricts imports and raises input costs for Indian small businesses.
Farm trade between India and the US is still modest, totalling $8 billion. India primarily exports rice, shrimp and spices, while importing nuts, apples and lentils. But Washington is eyeing bigger agricultural exports—particularly corn, soybean, cotton and maize—to help shrink its $45 billion trade deficit with India.
Experts fear that pressure for tariff concessions could undermine India’s support mechanisms for farmers, including the minimum support price (MSP) system and public procurement schemes that protect growers from price volatility.
“No tariff cuts are expected for dairy products or key staples like rice and wheat, where rural livelihoods are at stake. These are economically and politically sensitive sectors that affect more than 700 million people in India’s rural economy,” says Srivastava.
A scaled-down deal—similar in scope to the US–UK ‘mini trade deal’ announced on May 8—is increasingly seen as the most likely outcome.
Under such a pact, India may lower tariffs on select industrial goods—such as automobiles, a long-standing US demand—and offer limited agricultural concessions through quotas or cuts on specific products like ethanol, almonds, apples, raisins, avocados, olive oil, spirits and wine.
Beyond tariffs, Washington is likely to press Delhi for large-scale commercial purchases—ranging from LNG and oil to Boeing aircraft, helicopters and nuclear technology. The US may also push for liberalisation in multi-brand retail, benefiting companies like Amazon and Walmart, and for relaxed norms on re-manufactured goods.
“This ‘mini-deal’, if it goes through, will likely focus on tariff concessions and strategic commitments, leaving broader free trade agreement (FTA) issues—like services trade, intellectual property rights and digital regulations—for future negotiations,” says Srivastava.
At the outset, the two sides had appeared aligned on a pragmatic vision. “Trump and Modi had initially outlined a simple strategy: the US would focus on capital-intensive manufactured goods, while India would concentrate on labour-intensive sectors,” says Rossow. “But that alignment appears to have shifted.”
If talks collapse, experts say it is unlikely that Trump would immediately reinstate the 26 percent tariffs on Indian goods announced earlier this year—levies that 57 countries faced in April, with only the UK having secured an exemption so far. Specifically targeting India might be seen as punitive.
“Still, with Trump, surprises are always on the table,” Srivastava adds.
