A US team will visit India in the second half of August to carry forward the protracted negotiations for the first tranche of the bilateral trade agreement (BTA) between the two countries, official sources said here on Monday.
Even as the visit of US negotiators for the six round of BTA talks is scheduled, both sides would remain “engaged through (other) means on an interim arrangement that will enable New Delhi to avoid reciprocal tariffs,” the sources said.
The BTA process began shortly after the announcement of near-universal reciprocal tariffs by the US in early April. These extra levies have since been put abeyance while leaving a 10% baseline duty, and as per the US’s latest stance, could well resume after August 1.
Tariff tensions mount ahead of deadline
The development comes on the heels of US Treasury Secretary Scott Bessent saying that the Trump administration is more concerned about the quality of the trade agreements, and won’t “rush into anything,” a departure from its earlier insistence that a slew of trade deals, including an interim one with India, would be concluded soon.
Bessent stated that while negotiations were “moving along,” the emphasis was on high-standard outcomes rather than deadlines. “If we boomerang on August 1 tariffs, higher tariffs could put more pressure on countries,” he warned.
The US commerce secretary Howard Lutnick said on Sunday that there would be no further postponement of the (August 1) deadline. The European Union, the key ally of the US, however said it was readying retaliatory measures against the US if punitive trade tariffs are imposed.
India seeks safeguards on farm, tech and manufacturing sectors
The intended purpose of the BTA is to minimise, if not nullify, the reciprocal levy, by granting higher market access to the US goods, while also extracting a few commitments from the US in return.
As per the plan, the first tranche of the BTA is to be concluded by autumn of 2025.
A team of Indian negotiators returned from Washington last Saturday after four days of discussions from July 14 to July 17 under the fifth round. In these five rounds, the US team has visited New Delhi twice while Indian officials have been to Washington twice. The sixth round of talks will come after the reciprocal tariffs on major trade partners will be known which could provide a different direction to the negotiations, analysts said.
The reciprocal tariffs are slated to be in force from August 1 after two postponements since April 9. On April 2 US President Donald Trump had announced reciprocal tariffs on all its trade partners, and the rate of 26% was set for India.
Lutnick said in an interview to a television network: “That’s a hard deadline, so on August 1, the new tariff rates will come in. Nothing stops countries from talking to us after August 1, but they’re going to start paying the tariffs on August 1.” He said, “some small countries, the Latin American countries, the Caribbean countries, many countries in Africa would have a baseline tariff of 10% while the bigger economies will either open themselves up or they’ll pay a fair tariff to America.”
Since the announcement of reciprocal tariffs Trump has announced completion of trade deals with UK, Indonesia and Vietnam. Though discussions still continue on details with both Vietnam and Indonesia.
The countries with whom deals were proving to be difficult, the US president has issued letters imposing tariffs on their exports to the US. Under the unilateral exercise the letters have been sent to 23 countries and the European Union.
In their negotiations the officials in New Delhi remain firm on their stand to protect the farm sector and keep the markets for manufactured products in the US intact.
Along with duty cuts in the farm sector the US also wants India to allow entry of genetically modified agricultural products in India. It also wants India to lower duties on automobiles and buy more energy products.
While protecting its farmers’ interests especially in the dairy sector and cereals like wheat and rice, India has sought greater market access for its labour intensive and emerging sectors of manufacturing like electronics.
Apart from goods trade, the other objective of the US in these negotiations is to get a more liberal regulatory climate for its technology companies in India.
The strategic partnership between the two countries is also guiding the approach in the talks. The trade deal may be sweetened with India purchasing more defence equipment from the US.
The deal between India and the US goes beyond trade and both sides are keen to preserve the relationship. The US remains the biggest market for India’s exports and the only major economy with which it enjoys a trade surplus.
In FY2025, trade between India and the U.S. reached $186 billion as per commerce ministry data. India exported $ 86.5 billion in goods to the U.S. while importing $45.3 billion, creating a goods trade surplus of $41 billion. In services, India exported an estimated $28.7 billion and imported $25.5 billion, adding a $3.2 billion surplus. Altogether, India ran a total trade surplus of about $ 44.4 billion with the US.