Even as the United States rolled out a new wave of tariffs on several countries, President Donald Trump on Tuesday indicated that Washington is close to finalising a trade deal with India. Speaking at the White House, Trump noted progress in talks, saying, “We’re close to making a deal with India,” while announcing fresh tariff letters to nations including Japan, South Korea, Thailand, and Bangladesh, set to take effect from August 1.

The prospective US-India trade deal—originally envisioned as a broader agreement—has been scaled down to a mini pact focused on reciprocal tariff reductions. However, disagreements over agriculture and dairy remain major sticking points. The US is pushing for greater market access for genetically modified crops and American dairy products, but India is reluctant, citing food safety, environmental concerns, and the risk to rural livelihoods.

While agriculture contributes only 16% to India’s GDP, it supports nearly half the population. Cheaper US imports could undercut domestic prices, triggering political backlash and destabilising an already sensitive sector. Traditionally, India has excluded agriculture from free trade pacts and fears that concessions to the US could set a precedent for other trade partners.

Meanwhile, India is seeking tariff relief on labour-intensive exports like textiles, leather goods, and footwear—sectors critical for employment. New Delhi insists that any agreement must be balanced and include meaningful access for its own goods if the ambitious goal of doubling bilateral trade to $500 billion by 2030 is to be achieved.

According to sources, both sides are now focused on aligning tariff frameworks, with negotiators encouraged to identify mutually beneficial concessions. Despite current friction, the narrowing of the deal’s scope to targeted tariff cuts has raised hopes of a breakthrough, potentially laying the groundwork for a more comprehensive agreement in the future.

Even as the United States rolled out a new wave of tariffs on several countries, President Donald Trump on Tuesday indicated that Washington is close to finalising a trade deal with India. Speaking at the White House, Trump noted progress in talks, saying, “We’re close to making a deal with India,” while announcing fresh tariff letters to nations including Japan, South Korea, Thailand, and Bangladesh, set to take effect from August 1.

The prospective US-India trade deal—originally envisioned as a broader agreement—has been scaled down to a mini pact focused on reciprocal tariff reductions. However, disagreements over agriculture and dairy remain major sticking points. The US is pushing for greater market access for genetically modified crops and American dairy products, but India is reluctant, citing food safety, environmental concerns, and the risk to rural livelihoods.

While agriculture contributes only 16% to India’s GDP, it supports nearly half the population. Cheaper US imports could undercut domestic prices, triggering political backlash and destabilising an already sensitive sector. Traditionally, India has excluded agriculture from free trade pacts and fears that concessions to the US could set a precedent for other trade partners.

Meanwhile, India is seeking tariff relief on labour-intensive exports like textiles, leather goods, and footwear—sectors critical for employment. New Delhi insists that any agreement must be balanced and include meaningful access for its own goods if the ambitious goal of doubling bilateral trade to $500 billion by 2030 is to be achieved.

According to sources, both sides are now focused on aligning tariff frameworks, with negotiators encouraged to identify mutually beneficial concessions. Despite current friction, the narrowing of the deal’s scope to targeted tariff cuts has raised hopes of a breakthrough, potentially laying the groundwork for a more comprehensive agreement in the future.