New Delhi, Jul 22 – Hopes of an interim trade deal between India and the United States before Washington’s August 1 deadline have faded, with negotiations still stuck over tariff cuts on sensitive agricultural and dairy products, according to two Indian government officials familiar with the matter.
U.S. President Donald Trump had earlier threatened to impose a 26% tariff on Indian imports in April, pausing the move temporarily to allow for negotiations. That window closes on August 1, but unlike more than 20 other countries, India has not yet received a formal tariff notification.
India’s trade delegation, led by Chief Negotiator Rajesh Agrawal, returned from a fifth round of discussions in Washington without a breakthrough. “An interim deal before August 1 looks difficult, though virtual discussions are ongoing,” one official said. A U.S. delegation is now expected to visit New Delhi in the coming days to try and salvage the talks.
The core of the impasse lies in India’s refusal to open up politically sensitive sectors such as agriculture and dairy, while the U.S. remains firm on not rolling back increased tariffs on Indian steel, aluminium, and automobile exports. Officials are now exploring whether these contentious issues can be deferred for resolution at a later stage, beyond an initial agreement.
Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), warned that a 26% tariff could deal a blow to sectors like gems and jewellery. “However, this could be temporary, as both countries aim to sign the deal over time,” he added.
U.S. Treasury Secretary Scott Bessent told CNBC on Monday that while timelines are important, the Trump administration prioritizes the quality of trade agreements. On whether the deadline could be extended, he said the decision lies with President Trump.
Despite the deadlock, Indian officials remain cautiously optimistic about concluding a broader deal by September or October, as outlined during Prime Minister Narendra Modi’s meeting with Trump earlier this year. “Given that there have been five rounds of negotiations and another U.S. delegation is expected, we remain optimistic about finalising a trade pact,” said a third official, requesting anonymity due to the sensitive nature of the talks.
Neither the Indian Commerce Ministry nor the Office of the U.S. Trade Representative has commented publicly on the current status of negotiations.
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