Why trade deal between India, US is not signed yet
What's the story
India and the US have concluded their fifth round of negotiations for a potential Bilateral Trade Agreement (BTA). However, key issues like agriculture and automobiles remain unresolved. The talks were led by India's Chief Negotiator Rajesh Agrawal in Washington DC. Further discussions are likely in the coming weeks as both sides consider an interim trade deal. The August 1 deadline related to the suspension period of the 12% US tariff on Indian goods, adds urgency to the negotiations.
Negotiation
What both sides are seeking
India is primarily looking for relief from the 12% tariff imposed by the US in April. The US, meanwhile, is seeking duty concessions on industrial goods and automobiles (specially electric vehicles), wines, petrochemical products, agricultural goods, and dairy items. The latest talks between the two covered trade in Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) and broader economic concerns relating to non-market economies like China.
Sticking points
Friction over US tariffs on automobile imports
The US is demanding more agricultural access to Indian markets, including genetically modified (GM) crops like soyabean and corn. However, Indian farmer groups have strongly opposed this move. The talks also witnessed friction over US tariffs on automobile imports. The Donald Trump administration has imposed a 25% duty on passenger vehicles and select components from India, further straining negotiations.
Potential resolution
Interim trade deal likely by August 1
Despite the unresolved issues, an interim trade deal could still be reached by August 1. This is when the suspension period of the 12% US tariff on Indian products ends. However, agriculture and dairy may be excluded from this immediate deal to break the deadlock. Indian officials are focused on achieving a full bilateral trade agreement by year-end.