India’s chief trade negotiator Rajesh Aggarwal is set to reach Washington, DC on Wednesday for what officials describe as the ‘final leg’ of negotiations on a long-awaited India-U.S. mini trade deal. The visit marks a decisive moment in months of intense back-and-forth over tariffs, market access and sensitive sectors such as agriculture and dairy.
The deal is nearly complete, with both sides having resolved most contentious issues, say sources. The agreement is expected to be unveiled this week, pending final clearance from U.S. President Donald Trump.
Key Outcomes And Sticking Points
According to sources, Washington has dropped its blanket tariff demand that previously threatened to add layers of duties on Indian goods. Instead, it will impose a 10% baseline tariff on Indian exports—consistent with Trump’s earlier April 2 announcement.
India, in turn, will reduce or eliminate a series of additional retaliatory tariffs, with average duties now expected to fall to 11.5%.
The Indian side has agreed to a single tariff slab on imported American automobiles, seen as a gesture to address longstanding U.S. complaints over India’s complex and often steep auto tariffs.
However, no agreement has been reached on dairy exports, a major sticking point in earlier negotiations. India has held firm on excluding dairy from the deal, citing both domestic sensitivities and consistency with its ongoing talks with the European Union.
Similarly, New Delhi has not budged on its position regarding genetically modified (GM) crops. These remain off the table for any trade concessions.
On the other hand, the U.S. has accepted a 7% tariff on American goods entering India, seen as a balancing measure amid Trump’s broader push to shrink trade deficits.
Diplomatic Significance
The timing of Aggarwal’s visit is critical. The three-month suspension of new U.S. tariffs, announced in April, officially expired on July 9. While Trump has extended the deadline till August 1 to allow more time for mini-deals to materialize, pressure is building on both sides to wrap up negotiations. “The architecture of the deal is done. What’s left now is the political will,” said a senior Indian official involved in the discussions.
The White House has so far indicated that the agreement is “nearing the finish line” but the final word will depend on Trump, who has used tariff threats to push through trade pacts with Canada, the EU, and others in recent months.
Larger Trade Vision Still In Play
While this mini trade deal is limited in scope, it sets the stage for a broader India-U.S. Free Trade Agreement (FTA) expected to be completed by the end of the year. Prime Minister Narendra Modi and President Trump had signalled in February that the mini deal would act as a “first tranche” of a more comprehensive trade pact.
Meanwhile, India is pursuing parallel deals with the United Kingdom and the European Union. Modi is slated to travel to London on July 24 to sign the UK-India FTA. That deal, like the U.S. agreement, avoids politically sensitive categories such as dairy and apples but includes reductions in tariffs on alcoholic beverages.
