India and the United States are locked in intense negotiations as the August 1 tariff deadline, imposed by US President Donald Trump, approaches. However, despite five rounds of talks—the latest in Washington—no formal agreement has been reached, and a US trade team is expected to visit India only in the second half of August, after the critical deadline.

This timetable has heightened uncertainty about whether India will now face reciprocal tariffs of up to 26% on its exports to America, particularly in sensitive sectors such as steel, automotive parts, and aluminium.

Key sticking points have emerged around market access for American agricultural and dairy products, especially genetically modified crops like maize and soybean, which India traditionally restricts. India's negotiators have drawn a red line at opening its market to US dairy, underscoring that the sector employs tens of millions of small farmers. These agricultural concessions are politically sensitive in India and remain a major obstacle to a deal.

From the US perspective, the Trump administration is pushing for concessions on agriculture and reciprocal tariff arrangements, with the threat of substantial tariffs looming should talks fail. US officials have repeated that August 1 is a "hard deadline," after which tariffs on Indian goods will take effect, regardless of whether talks continue. This stance puts considerable pressure on Indian negotiators to accept terms that have so far been deemed unacceptable.

India’s priorities in the negotiations include securing better terms for its own exports in textiles, footwear, auto components, and shrimp. The country also seeks greater transparency in US trade agreements; Indian negotiators have reportedly raised concerns over the lack of clarity in US deals with Vietnam and Bangladesh, which contain confidentiality clauses. In trade at large, India's exports to the US have risen substantially in recent months, reaching $25.51 billion in the April-June period, highlighting the high stakes for Indian industry.

While Trump has publicly insisted that a breakthrough is imminent and compared India to recent deals with other countries, the gap between rhetoric and reality is evident, as the talks remain deadlocked over these core issues.

Both parties are now looking towards a possible interim or "mini-deal" to forestall the immediate tariff risk, with sources indicating that a full agreement may not materialize before September or October. Some reports suggest that agriculture and dairy may be excluded from the immediate deal to break the logjam, allowing negotiators to secure limited progress while deferring more contentious issues.

Meanwhile, the prospect of hefty tariffs—reaching up to 26%—remains a significant concern for Indian exporters, even as some analysts suggest the immediate economic impact on India may not be severe if an interim deal is secured. The ongoing uncertainty is already causing Indian businesses to adopt a cautious stance towards their American operations, reflecting the unpredictability of the current trading environment.

While both India and the US express optimism about the prospect of a deal and are under pressure to achieve one, especially to avoid the imposition of new tariffs, deep divisions over agricultural access, auto sector duties, and trade transparency are preventing swift resolution. The next decisive round of talks will only occur after the August 1 deadline, ensuring that the question of tariffs—and the future of India-US trade—remains precariously poised.

Based On Swarajyamag Report