India is actively pursuing a full exemption from the additional 26% tariff imposed by the United States on Indian goods as both countries work towards announcing an interim trade agreement before July 8, a government official has confirmed.
The additional reciprocal duty was introduced by the US on April 2 but was temporarily suspended for 90 days, with the suspension set to expire on July 9.
Meanwhile, the existing 10% baseline tariff on Indian goods remains in place.
New Delhi is aiming to finalise a limited trade pact within this grace period and is seeking relief on both the 26% additional and 10% baseline duties. The agreement under negotiation is expected to cover goods, services (including digital services), and address some non-tariff barriers.
“Talks are moving positively. Before July 8, we are looking at concluding an interim deal before the first tranche. It will include goods, non-tariff barriers, some areas of services also like digital. We are trying that the 26 per cent additional duty and the 10 per cent baseline tariff should not be there for India,” said the official, adding that India is pushing for concessions for labour-intensive sectors such as textiles and leather.
Commerce and Industry Minister Piyush Goyal was in Washington earlier this week to accelerate the discussions. During his visit, he met with US Trade Representative Jamieson Greer and US Commerce Secretary Howard Lutnick.
India is also working to protect sensitive domestic sectors like agriculture and dairy, which may result in mechanisms such as import quotas or a minimum import price (MIP) in the agreement.
While the US administration under President Trump needs congressional approval to reduce tariffs below the Most Favoured Nation (MFN) rates, it has the authority to lift the reciprocal tariffs imposed on countries like India. India hopes to secure firm commitments from the US for duty relief in sectors employing large numbers of workers.
The broader goal for both sides is to finalise the first phase of a bilateral trade agreement by fall (September–October) and to more than double the current bilateral trade volume to USD 500 billion by 2030. The current trade figures show the US as India's largest trading partner for the fourth year in a row, with bilateral trade valued at USD 131.84 billion in 2024–25.
The discussions this week between minister-level representatives were followed by ongoing negotiations among top-level negotiators, which are expected to continue through May 22.
India is lobbying for tariff concessions on a range of exports including textiles, garments, leather goods, gems and jewellery, chemicals, shrimp, plastics, oil seeds, bananas, and grapes.
In return, the US is requesting tariff reductions on industrial products, electric vehicles, wines, petrochemicals, dairy products, and agricultural exports like apples, tree nuts, and genetically modified (GM) crops. However, India has regulatory concerns around GM imports and has not permitted them so far, though it is open to considering non-GM items like alfalfa hay—a type of cattle feed.
The US has repeatedly voiced concerns about non-tariff barriers impacting its exports to India. Addressing these issues is also expected to be part of the interim agreement.
With the 90-day suspension window approaching its end, both nations are working with urgency to seal the deal. “We are trying to finalise things as early as possible,” the official said.
India currently enjoys a significant trade surplus with the US. In 2024–25, the surplus stood at USD 41.18 billion, up from USD 35.32 billion in 2023–24. The consistent rise in the trade gap has been a point of contention in trade dialogues, with the US seeking more balanced trade terms going forward.