The prospects of an interim trade deal between India and the United States before Washington's August 1 tariff deadline have reportedly dimmed, as negotiations remain deadlocked over key issues, including tariff cuts on agricultural and dairy products, two Indian government sources told Reuters.
US President Donald Trump had threatened to impose a 26 per cent tariff on Indian imports earlier this year but paused the move to make room for negotiations. That pause expires on August 1, though India is yet to receive a formal tariff letter, unlike over 20 other countries.
‘Interim deal difficult before August 1’
India’s trade delegation, led by chief negotiator Rajesh Agrawal, returned from Washington after a fifth round of negotiations without a breakthrough. “An interim deal before August 1 looks difficult, though virtual discussions are ongoing,” one of the Indian government sources said, adding that a US delegation is expected to visit New Delhi soon to continue negotiations.
Indian officials disclosed that talks have stalled as New Delhi is unwilling to open its politically sensitive agriculture and dairy sectors, while Washington is resisting India’s demand for relief from higher tariffs on steel, aluminium and automobiles. According to a second Indian official, negotiators are exploring whether these contentious issues can be deferred to a later stage, after an interim agreement is reached.
Focus on gems, jewellery
Ajay Sahai, director general of the Federation of Indian Export Organisations, warned that sectors such as gems and jewellery could be significantly impacted if the proposed 26 per cent tariffs are imposed. “However, this could be temporary, as both countries aim to sign the deal over time,” Sahai said.
US Treasury Secretary Scott Bessent told CNBC that the Trump administration was “more concerned with the quality of trade agreements than their timing.” When asked if the deadline could be extended for countries still in talks, he said that the decision would rest with President Trump.
Despite challenges, Indian officials remain hopeful of clinching a broader trade deal by September or October, consistent with an understanding between Prime Minister Narendra Modi and President Trump in February. “Given that there have been five rounds of negotiations and another U.S. delegation is expected, we remain optimistic about finalising a trade pact,” a third government source said.
Meanwhile, Minister of State for Commerce and Industry Jitin Prasada informed Parliament that “India-US bilateral trade agreement negotiations were launched in March 2025. Five rounds of negotiations have been held, the last being from July 14-18, 2025, at Washington.”
Prasada also noted that, separately, India has conducted 12 rounds of negotiations with the European Union for a proposed free trade agreement, with the latest round held in Brussels from July 7-11.
With inputs from agencies
