Why India's interim trade deal with US remains stuck
What's the story
The much-anticipated interim trade deal between India and the US remains stalled. This is despite US Secretary of State Marco Rubio's optimism that 99% of the agreement is done and an announcement could come in weeks. As per BusinessLine, the main hurdle lies in Washington's demand for higher import tariffs, which New Delhi isn't willing to accept beyond the additional 10% levy on Indian exports.
Tariff negotiations
Domestic political fallout of agricultural concessions
India believes that a deal is not possible under the current tariff conditions and US demands on agriculture.
The country is also weighing the domestic political fallout of agricultural concessions that the Donald Trump administration wants to highlight for Republican voters ahead of mid-term elections.
A source tracking the matter told BusinessLine, "It makes no sense to sign a deal two weeks before the mid-term elections in the US."
Tariff disagreement
India unwilling to budge on tariff issue
The US wants to keep the 18% rate proposed in a framework announced on February 7.
However, India sees no reason to accept it when the current additional levy on Indian exporters is already 10%.
The source added, "Even if the US decides to be flexible and brings down proposed tariffs on India to below 18%, say to 14% or even 12%, there is no way that India could accept it."
Assurance
Other factors affecting the deal
India is also seeking assurances that if additional tariff penalties are imposed, they would be lower than those on competing countries like Vietnam, Bangladesh, and Indonesia.
The country also wants no new tariffs after signing the deal.
An anonymous source said, "For New Delhi, accepting agricultural concessions alongside a higher tariff burden could be difficult to defend domestically right now."