The final stage of the India-US trade deal is about to kick off soon. The US negotiators are expected to visit India today, on June 5, for a two-day meeting. New Delhi is expected to make some concessions and reduce tariffs on select US products as part of the negotiations.
Source based reports indicate that these include select agricultural goods and defence equipment. In return, India seeks concessions on reciprocal tariffs and better access to the US market for labour-intensive sectors such as textiles and leather products.
US reminds trading partners of upcoming deadline
The White House confirmed on Tuesday that the US has asked its trading partners to submit their best offers by Wednesday. White House spokesperson Karoline Leavitt said, “The United States Trade Representative sent this letter to all of our trading partners just to give them a friendly reminder that the deadline is coming up.”
The US has implemented a 90-day suspension of a 26 per cent reciprocal tariff on Indian goods. This is set to expire on July 8, 2025. This pause has intensified efforts to reach a trade deal before the deadline.
US pushing to reduce trade deficit with India
Reports and discussions indicate that the US possibly may be looking at better market access for exports such as oil, defence equipment, soyabean, corn, whisky, and automobiles. These efforts aim to reduce the US trade deficit with India and lower high tariff barriers.
US Secretary of Commerce Howard Lutnick highlighted that US exports to India jumped 11.49 per cent to $63 billion in March 2025 compared to the previous year.
US aiming to boost defence exports to India
India has historically had strong business engagement with Russia for defence equipment. However, the US could be now looking to increase its defence exports to India. The broader aim is to increase bilateral trade from the current $190 billion to $500 billion by 2030.
At the US-India Strategic Partnership Forum in Washington DC, Lutnick said, “There were certain things that the Indian government did that generally rubbed the US the wrong way. For instance, they generally buy military gear from Russia…” He added that India is already “addressing” this issue.
According to the Stockholm International Peace Research Institute, Russia still supplied about 36 per cent of India’s arms imports between 2020 and 2024. This is down from 55 per cent between 2015-2019 and 72 per cent during 2010-2014.
Agricultural products in focus
The US has criticised India’s trade policies for limiting agricultural imports through high tariffs and restrictions on genetically modified seeds. The US wants better access for its key agri products like soyabean and corn, which are also major exports to China. With a tense trade relationship with China, the US may target India as a vital market for these products. The US may also seek a boost in access for its apples.
Whisky and automobiles likely to see tariff cuts
India is expected to open its protected sectors such as automobiles and alcoholic beverages, following a pattern similar to its recent deal with the UK. Even before talks began, India cut duties on bourbon whisky to 50 per cent from 150 per cent. Bourbon whisky is mostly produced in the US, with 95 per cent coming from Kentucky.
“Zero-for-zero” tariff on US auto parts and steel
India has also proposed a “zero-for-zero” tariff on US auto parts and steel after US President Donald Trump announced plans to raise the existing 25 per cent tariffs on steel and aluminium imports on May 30. India has also formally complained to the World Trade Organization, claiming the right to impose retaliatory tariffs on US goods.
In the fiscal year 2024-25, India exported $4.56 billion worth of iron, steel, and aluminium products to the US. This included $587.5 million in iron and steel, $3.1 billion in iron or steel articles, and $860 million in aluminium products.
For the fourth year in a row, the US remained India’s largest trading partner in 2024-25, with bilateral trade reaching $131.84 billion. The US accounts for about 18 per cent of India’s total goods exports, 6.22 per cent of imports, and 10.73 per cent of overall merchandise trade.
US Commerce Secretary optimistic over an imminent deal
US Commerce Secretary Howard Lutnick expressed optimism about a deal soon. “I think to be in a very, very good place, you should expect a deal between the United States and India in the not-too-distant future because I think we found a place that really works for both countries,” he said.
His remarks reflect rapid progress in negotiations that faced many challenges over the years. The visit of US officials to India aims to finalize an interim trade agreement, with India pushing for full exemption from the 26 per cent reciprocal tariff on its goods.