The United States is said to be closer to a final agreement on an interim trade pact with India that would see offered tariffs fall below 20%, extending more favorable terms to New Delhi than its many regional rivals.
As per a Bloomberg report citing sources familiar with the matter, India will not likely be served notice of higher tariffs this week. Instead, the interim accord will be announced through a formal announcement.
The temporary accord is set to lay the groundwork for future negotiations between the two nations, giving India more time to settle issues before a more ambitious deal later this year. The new terms are reported to have a launching tariff rate of below 20%, down from the initial 26% proposal, with room for adjustments to be made ahead of a final agreement. Still, an exact date for the announcement is unclear.
Once done, India would become part of a select few countries that have managed to ink trade deals with the Trump administration. Others, however, have witnessed surprise tariff hikes of as much as 50% this week, days ahead of the August 1 deadline.
India is said to be negotiating more favorable terms than Vietnam received, which settled for a 20% tariff under its agreement. Caught off guard by the high tariffs, Vietnam is now attempting to renegotiate. To date, the UK is the sole country to have signed formally a trade agreement with the Trump administration.
Talking to NBC News on Thursday, President Trump declared, "he is thinking of imposing global tariffs of 15% to 20% on most trading partners who have not yet been given specific rates."
The general tariff rate for most U.S. trading partners stands at 10%. In Asia, new rates include 20% on Vietnam and the Philippines, and up to 40% for nations such as Laos and Myanmar.
Even though India was one of the first to resume trade negotiations this year, recent events show tension in the bilateral relationship. Trump has hinted that an agreement may be announced sooner, but also posed the possibility of further tariffs linked to India's association with BRICS.
An Indian delegation at the highest level will visit Washington in the near future to push the talks further. India has already laid out its final offer for trade and made its red lines clear during the negotiations.
Some contentious major areas are still unresolved, such as Washington's insistence on India's clearance of genetically modified (GM) crops—something New Delhi has been resisting based on its implications for Indian farmers. Non-tariff measures impacting agriculture and regulatory barriers in the pharma sector are other contentious areas.
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