Commerce negotiations between India and the US have come to a standstill as a consequence of sharp disagreements on import duties for auto elements, metal, and agricultural merchandise.

This deadlock has dashed hopes of reaching an settlement earlier than US President Donald Trump’s July 9 deadline to impose reciprocal tariffs, in accordance with Indian officers conversant in the matter. The impasse marks a big shift from earlier optimism, when each side steered India may very well be among the many first to strike a deal beneath the brand new US tariff regime.

Key Sticking Factors: Agriculture and Business

The principle level of rivalry is the US demand for India to decide to deeper cuts on import tariffs for American farm items comparable to soybeans and corn, in addition to for vehicles and alcoholic drinks. The US can also be looking for the easing of non-tariff limitations that prohibit market entry for its merchandise.

For India, the stakes are excessive: agriculture stays a vital sector for rural employment, and home industries comparable to auto, prescription drugs, and small-scale manufacturing have lobbied for gradual, relatively than sweeping, market openings to keep away from being undercut by US imports.

Indian negotiators are pushing for a rollback of the proposed 26 per cent reciprocal tariff set to take impact on July 9, together with concessions on present US tariffs on metal and auto components. Nevertheless, US negotiators haven’t agreed to those calls for.

Political and Financial Implications

The breakdown in talks comes regardless of Indian Prime Minister Narendra Modi’s efforts to place India as a key US companion, aiming to draw American corporations and diversify provide chains away from China.

India has provided tariff cuts on choose objects like almonds, pistachios, and walnuts, and has proven willingness to increase preferential remedy to US imports in sectors comparable to vitality, autos, and defence. Nevertheless, Indian officers say these presents haven’t been sufficient to bridge the hole, with the US holding out for broader concessions.

Indian exporters now face the prospect of a steep 26% tariff on shipments to the US if no deal is reached by the deadline. Regardless of a number of rounds of talks, there was little progress, although officers haven’t dominated out a last-minute breakthrough if Modi and Trump intervene instantly.

Broader Commerce Technique
India can also be hedging its bets by advancing commerce negotiations with different companions. Talks for a free commerce settlement (FTA) with the European Union are ongoing, and India just lately concluded FTA talks with the UK.

These strikes are aimed toward decreasing India’s dependence on the US market and mitigating the influence of any potential US coverage shifts beneath Trump.

Outlook: Uncertainty Stays
Regardless of the present deadlock, Indian officers emphasize their long-term dedication to the US as a trusted financial companion, whereas sustaining coverage independence. “We’re eager, however not determined to signal a deal earlier than the July 9 deadline,” one official mentioned.

Even in a worst-case state of affairs, India believes it will probably soak up the influence of reciprocal tariffs, given its continued tariff benefit over opponents like Vietnam and China.

India’s exports to the US have really elevated in latest months, suggesting that earlier US tariff hikes had a restricted influence on commerce flows. Because the deadline approaches, the ball is now within the US courtroom, with each side watching to see if top-level political intervention can break the impasse.