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India-US trade talks enter final stretch as agriculture, dairy remain sticking points

India-US trade talks enter final stretch as agriculture, dairy remain sticking points

As Commerce Minister Piyush Goyal continues high-level trade talks in Washington, India and the United States are nearing a potential breakthrough on a long-pending bilateral trade agreement.

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High-stakes negotiations aim for interim trade deal before July 9 deadline amid renewed tariff tensions

NEW DELHI, 22 May 2025: As Commerce Minister Piyush Goyal continues high-level trade talks in Washington, India and the United States are nearing a potential breakthrough on a long-pending bilateral trade agreement.

However, core disagreements over agriculture and dairy access continue to pose significant hurdles, according to former Indian Ambassador to the WTO, Jayant Dasgupta.

Speaking to CNBC-TV18, Dasgupta said that India has remained firm on excluding common US dairy imports, citing consumer sensitivities and biosecurity concerns. “We will not allow the common products to come in,” he asserted, suggesting only niche dairy items like premium cheeses may be allowed under a limited framework.

Another sticking point is genetically modified (GM) crops. India continues to resist GM imports, although it has signaled some flexibility for certified non-GM products. Key US exports such as corn and soybean are likely to remain protected through high import duties unless Washington agrees to a tariff rate quota (TRQ) system, which would allow limited imports at concessional tariff rates.

Tariff Tensions: India’s Zero-for-Zero vs US 10%

At the center of the standoff is India’s push for a "zero-for-zero" tariff deal, which would involve the complete elimination of duties on select goods from both countries. However, reports suggest the US wants to retain a 10% tariff on Indian products, citing domestic industry concerns.

Dasgupta believes that even a 10% US tariff—if it remains lower than those imposed on China or Vietnam—would still offer India a competitive edge. “Even 10% will be advantageous for India,” he said, pointing to the broader geopolitical trade dynamics.

Phased Deal Structure in the Works

India is reportedly proposing a phased approach to the agreement:

Interim Agreement (by July 8): Covering priority sectors to de-escalate immediate tensions.

Second Phase (October 2025): Expansion into 19 additional sectors.

Final Agreement: Would require US Congressional approval, particularly if it includes rollback of Trump-era tariffs on steel and aluminum.

However, Dasgupta noted that a full return to pre-Trump tariff levels is unlikely. “Maybe these tariffs will get reduced, but they will not come down to the pre-Trump tariff regime,” he added.

Clock Ticking: July 9 Suspension Deadline Looms

Urgency around the deal has escalated following a 26% reciprocal tariff imposed by the US on Indian goods on April 2, which has only been temporarily suspended for 90 days. That suspension is due to expire on July 9, prompting both sides to accelerate efforts to reach an early harvest agreement.

Goyal has already met with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, with negotiations reportedly entering the final stretch.

An interim agreement, even if partial, could go a long way in defusing trade tensions and creating momentum for a broader pact that strengthens one of the world’s most consequential bilateral economic relationships.

Image credit: apparelresources.com


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