The government is also concerned about the potential impact of steep tariff cuts on India’s balance of payments, as trade surplus with the US is already declining, and would rather wait for the outcome of the US Section 301 investigations than negotiate under the shadow of tariff threats.
“At present, US tariffs on Indian exports are almost back to the levels that prevailed when President Donald Trump took office, as the reciprocal tariffs have been suspended and the additional 10 per cent global tariff imposed in their place is also set to lapse on July 24.
In such a situation, it would be politically untenable for the government to accept a trade deal that places a disproportionate tariff-reduction burden on India,” a source tracking the matter told businessline.
The US insistence on greater market access in agriculture has further complicated the negotiations.
Farmers’ organisations have been opposing any move to open up the sector, arguing that Indian farmers cannot compete with heavily subsidised US agriculture.
“It is a huge challenge to persuade the US to moderate its demand for greater market access for agricultural products, as the Trump administration is under pressure to deliver on its promises to the American farm lobby.
This is fuelling opposition in India, with farmers and farm organisations increasingly calling for the proposed trade deal to be shelved,” the source said.
India is also seeking a better tariff deal than competing Asian exporters such as Vietnam and Bangladesh.
The IEEPA tariffs were later struck down by the US Supreme Court.
“There is less appetite now for tariff concessions that could spike imports without delivering equivalent export gains,” the source said.
