Negotiations on a Temporary Agreement for Reciprocal Customs Duties between India and the US remain at a standstill
The deadline for an interim trade agreement between India and the United States, which was set for August 1, 2025, appears increasingly unlikely. Despite multiple rounds of negotiations, key sticking points remain unresolved.
The US has extended the suspension of tariffs on Indian exports until August 1, providing a temporary breather and additional time for talks. Finalizing an interim deal before this date is a priority to avoid steep new tariffs.
Key points of contention include tariff suspensions and duties, agriculture and automobiles, export controls, and non-market economy issues. Discussions have also focused on India's aim for import quotas in sensitive sectors like dairy and agriculture.
India's commerce department special secretary, Rajesh Agrawal, has been leading the negotiations, but reports as of late July 2025 suggest that prospects for a finalized interim agreement before August 1 have dimmed significantly. Instead, the countries are eyeing a broader phase-one deal targeted for September or October 2025.
The US is seeking concessions in industrial goods, automobiles, wines, petrochemical products, dairy, and other agricultural products. India, on the other hand, wants up to 7% cut in basic customs duty for its exports of labor-intensive products like leather.
The tariff issues involved in the discussion are from sensitive sectors such as agriculture, automobiles, digital services, and special chemicals, organisms, materials, equipment, and technologies (SCOMET) trade. The US export control category known as SCOMET can affect technology transfers and dual-use goods.
Negotiations for the proposed bilateral trade agreement between US and India were launched in March 2025. So far, five rounds of talks have been held, with the last being from July 14-18, 2025.
India's strategic geopolitical standing is advantageous in its negotiations with the US. The two countries are closer than they have been in many years, with a stronger relationship than ever before.
The government is in constant touch with key officials virtually in Washington regarding this matter. New Delhi is exploring all possible options to strike a suitable deal with the US before the deadline. A US delegation is expected to visit New Delhi soon to continue negotiations.
The sixth round of negotiations for a bilateral trade deal between US and India is expected to be held in the second half of August. Meanwhile, negotiations for the proposed free trade agreement between India and the European Union have progressed, with twelve rounds of talks held so far. The last round was held from 7-11 July in Brussels.
- Amidst the impasse in negotiations, the focus in business and politics circles, as well as general-news outlets, has shifted to the possibility of a broader phase-one deal between India and the United States, with September or October 2025 now being targeted.
- In the finance sector, the extension of tariff suspensions on Indian exports until August 1 by the US offers a temporary respite, buying more time for both countries to iron out key sticking points, such as tariff disputes in agriculture, automobiles, and technology transfers, before steep new tariffs come into effect.
