New Delhi: In the past two years, national trade talks have become more fluid worldwide. Tariffs are changing rapidly with a greater emphasis on relative advantage instead of market access, and countries are increasingly seeking more than just market access. The ongoing trade negotiations between India and the U.S. seem to be in that direction.
Commerce Secretary Rajesh Agrawal on Tuesday said the proposed trade pact between India and the United States could be wrapped up before July 24, when the U.S. temporary 10% additional global tariffs are due to lapse. Known as the “most direct indication so far” of a deal that has undergone several adjustments in recent months, the statement was made at a CNBC-Awaaz event.
Tariff reduction, however, is not the only issue on the table here; at the core of the negotiations is India’s attempt to gain a competitive advantage over competing manufacturing and export economies. That nuance matters. The debate has now shifted from the question of whether or not a deal will materialise, and to what kind of role India can be put in the global trade system that is increasingly divided.
The tariff system developed as it did in the United States, amid a somewhat extraordinary legal and political history. The US had previously applied a different 10% additional tariff to each of its trading partners under a framework of reciprocal tariffs, which was invalidated by a Supreme Court decision earlier this year. As Section 122 tariffs can be applied for 150 days at a time, the July 24th date is an informal cut-off for the current round of negotiations.
The tariff regime is also different. Presently, there is a uniform tariff, which will continue until July 24. Before that, I feel it’ll be done”, Agrawal said during the interaction.
The most obvious is that US law has prompted both countries to rethink the outline of the proposed deal. Reportedly, the previous talks had focused on reciprocal tariffs and punitive duties related to India’s oil imports from Russia. It was only after these were set aside that the negotiators were forced to go back to the drawing board.
With India’s new goal now more specific. Officials are looking for terms on tariffs which would put India’s exporters in a more favourable position than other economies, especially in areas where global value chains are already leaning India’s way. It may be in industries such as engineering goods, electronics, textiles, and chemicals, where factories are actively evaluating non-China suppliers.
Meanwhile, new challenges are arising from Washington. The US has launched Section 301 of the Trade Act investigations on overcapacity and “forced labour” related issues with major trade partners. Section 301 gives the US administration much more leeway to impose additional tariffs, whereas Section 122 has a fixed cap.
That adds an element of uncertainty to the negotiations. Both sides will continue to keep a close eye on these matters as they progress through the larger trade probes, whether the tariffs are in force or not. In recent years, the business community has come to realize that tariff stability today is not necessarily tariff stability six months later.
But the diplomatic engagement seems to be afoot. A team headed by US Trade Representative Jamieson Greer is coming to India next month for negotiations while an Indian delegation came to the US last month for talks. Earlier, U.S. Secretary of State Marco Rubio said the talks are still a priority for both governments.
The changing strategy is also apparent in India’s overall trade policy. The government also has a number of bilateral trade deals underway alongside the US negotiations, indicating a more aggressive approach to market integration.
The Comprehensive Economic Partnership Agreement with Oman will take effect on June 1, Agrawal said. The pact, signed in December last year, is expected to boost market access in various areas such as petrochemicals, logistics, and manufacturing inputs.
The free trade agreement with New Zealand, agreed in April, is likely to be fully implemented in October or November, once the legal and procedural processes are complete.
More important, perhaps, from a longer-term standpoint, is the development of the India-European Union trade agreement. The pact is currently in its legal scrubbing and finalization phase, and, according to Agrawal, it will be signed before the end of 2026. If timelines are met, the agreement may be in effect before March 2027.
These overlapping negotiations are part of a greater economic assessment for India. Domestic manufacturing incentives and currency changes are no longer the only factors at play in shaping export competitiveness. The structure of trade — the rates and speeds of customs clearance, the tariff protections awarded to whom — has become a key feature of industrial policy.
These accords also serve a pragmatic purpose. Global companies diversifying their supply chains are making decisions today, not 5 years from now. Predictable trade access and manufacturing scale will likely attract more investment to countries that can offer them.
The timing of the agreement between the two countries would depend on how quickly both sides can align their commercial interests with political realities, Agrawal said. Trade transactions don’t necessarily go in a straight line, particularly when it comes to major economies.
However, the latest remarks indicate that the talks are taking a more decisive turn. But the mere promise of tariff certainty is significant for Indian exporters, who are working in a volatile international environment.
