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COVER STORY JULY 04, 2025 | The Indian Eye 5

Moreover, India’s reluctance ex- policy analyst. “It tells the world that
tends to tariff reductions on products the US and India are aligned not just
such as maize and soybean—areas militarily, but economically as well.”
dominated by US agribusiness. Offi- That alignment becomes even
cials in New Delhi argue that a fair more important as the global econo-
deal must reflect the development my recalibrates after the COVID-19
needs and domestic priorities of the pandemic, wars in Europe and the
Indian economy. Middle East, and the ongoing tech-
From the American perspective, nological rivalry between the US and
the focus is on market access and China.
deficit reduction. Analysts note that While the benefits are clear,
India maintains some of the high- the hurdles remain formidable. Do-
est average tariff rates among major mestic political constraints in both
economies. According to a Crisil re- countries can limit flexibility. In the
port, this gives US exporters a signif- US, agricultural lobbies are pushing
icant opportunity should tariffs be hard for greater access, while Indian
lowered under the Bilateral Trade farmers’ unions have warned against
Agreement (BTA). any “backdoor entry” of foreign
The US is particularly keen on agri-products.
expanding exports in agriculture, en- Then there are technical barri-
ergy, and defense. In 2024, India ac- The prospect of a breakthrough in trade relations was set in motion earlier this year when PM ers: disputes over regulatory align-
counted for only a modest share of US Narendra Modi and President Trump agreed to pursue a bilateral trade agreement (ANI) ment, sanitary and phytosanitary
exports in products like walnuts, pis- measures, and e-commerce norms
tachios, and cranberries. There is sig- to shift in favor of the US. That could April 10, was meant to avoid pre- have complicated negotiations. Even
nificant scope for growth, especially be politically sensitive in India, where cisely this situation. While a partial among sectors deemed “low-hanging
in processed foods and fresh produce. trade surpluses with major econo- deal could still be finalized before the fruit,” friction persists.
Energy, too, presents a promising mies are seen as a measure of eco- fall, both governments are aiming to Still, the tone remains largely
frontier. India is one of the world’s nomic strength. conclude at least the first tranche by constructive. Senior officials from
largest importers of liquefied natural If no agreement is reached by early July. both sides are believed to be work-
gas (LNG), and the US has emerged July 9, tariffs will revert to pre-nego- Beyond the economics, the deal ing round-the-clock in Washington to
as a reliable supplier. The US offers tiation levels. For India, that means holds immense geopolitical signifi- iron out last-minute differences.
greater price stability and has already a 26% reciprocal tariff on a variety cance. As both nations grapple with While neither side has confirmed
signed long-term contracts with Indi- of US goods. The reimposition could the rise of China and seek to fortify the specific contours of the agree-
an buyers, making LNG a mutually strain relations, undermine business the Indo-Pacific, trade serves as a ment, experts believe it will likely
beneficial area of cooperation. confidence, and reverse recent diplo- critical pillar of bilateral coopera- focus on a select list of goods and ser-
In the defense sector, the US is matic gains. tion. A successful agreement would vices. The first tranche may include
increasingly positioning itself as a Government sources have ex- reinforce the strategic trust between reduction of tariffs on energy com-
major supplier. Russia’s traditional pressed cautious optimism. “Even if New Delhi and Washington, particu- modities such as LNG, greater US
dominance in India’s defense im- tariffs return to earlier levels, India larly as both countries participate in access to agricultural products like
ports is waning, creating an opening remains relatively better off com- multilateral frameworks like QUAD almonds and cranberries, Indian con-
for Western firms. The launch of pared to other Asian economies. But and IPEF (Indo-Pacific Economic cessions on limited pharmaceutical
INDUS-X, a bilateral defense inno- the goal is to avoid that scenario al- Framework). and textile exports, a framework for
vation initiative, further underscores together by reaching a deal,” said a “The trade deal is not just an increased defense procurement co-
the growing synergy. senior Indian negotiator. economic decision, it’s a geopoliti- operation, and a roadmap for deeper
Despite the asymmetry in mar- The 90-day pause, enacted on cal signal,” said a New Delhi-based engagement on digital trade and in-
ket size and export volume, Indian tellectual property.
negotiators are not without leverage. Each of these areas has been
While India’s exports to the US may carefully selected to avoid triggering
not surge under the deal—given that backlash at home while delivering
many already enjoy duty-free sta- tangible results.
tus—New Delhi is focusing on niche The next few days could define
sectors such as smartphones, phar- the trajectory of India-US economic
maceuticals, textiles, and gems and relations for years to come. For New
jewelry. These sectors are labor-in- Delhi, the challenge is to open up se-
tensive and strategically important lectively, balancing global aspirations
for India’s economic growth. with domestic priorities. For Wash-
“India is negotiating to make ington, the test lies in recognizing In-
a nice, fair, equitable and balanced dia as not just a market, but a partner.
agreement to promote business,” As negotiators pore over spread-
said Commerce Minister Piyush Goy- sheets and policy briefs, what’s at
al. “Both our leaders have decided to stake is more than just trade. It is a
enter into a bilateral trade agreement relationship built on mutual respect,
which will be mutually beneficial for strategic alignment, and shared dem-
both the economies, businesses on ocratic values. The world is watching.
both sides and the people of both And come July 9 -- or before --
countries.” Union Minister Piyush Goyal (left) has been leading the Indian side in the long and complex we will know whether diplomacy has
Still, Crisil’s analysis suggests negotiations (ANI Photo/Jitender Gupta) once again delivered where politics
that the overall trade balance is likely so often falls short.

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