India-U.S. Trade Talks Continue India Seeks Tariff Cuts on Exports

05 Jul, 2025

India has intensified its position in ongoing trade negotiations with the United States, now entering their sixth day in Washington. Aiming to secure a fair and balanced trade pact, India is pushing strongly for duty concessions on its labour-intensive exports like textiles, leather, garments, gems and jewellery, plastics, chemicals, shrimp, oil seeds, grapes, and bananas. These sectors form a significant share of India’s exports to the U.S. and are crucial for generating employment across the country.

India’s negotiating team, led by Special Secretary Rajesh Agrawal from the Department of Commerce, has extended its stay in the U.S. to push for better terms in the interim trade deal. The discussions, which began on June 26, are moving into a critical phase with a deadline looming — the suspension of the U.S.-imposed 26% reciprocal tariffs ends on July 9. If no agreement is reached, these tariffs will automatically be reinstated, impacting India’s exports heavily.

While the U.S. is seeking duty concessions on agricultural products, dairy items, industrial goods, electric vehicles, and wines, India remains firm on protecting its sensitive farming sectors. Indian farmers, mostly engaged in subsistence farming on small plots, could face significant economic strain if low-duty U.S. agricultural imports flood the market. Historically, India has never opened its dairy sector under any trade pact and is unlikely to make an exception.

India’s main concern is the continuation of U.S. tariffs—both MFN (Most Favoured Nation) and additional country-specific duties—that severely affect its high-employment export sectors. These include garments, textiles, carpets, footwear, ceramics, and wood products. For example, garments alone contributed over $5.3 billion to exports in FY25, but face tariffs between 8% and 20%. These sectors are largely run by MSMEs in regions like Uttar Pradesh, Tamil Nadu, Gujarat, and West Bengal, and play a vital role in rural employment, women’s economic participation, and export growth.

Trade experts emphasize that without meaningful relief from these high tariffs, the Free Trade Agreement (FTA) could be politically unpopular and economically unviable for India. Talks are also underway to conclude the first tranche of the proposed Bilateral Trade Agreement (BTA) by September-October 2025, aiming to double bilateral trade to $500 billion by 2030. India continues to seek full elimination of the 26% surcharge and a fair deal that supports its employment goals and MSME-driven export sectors.

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