Trump tariffs: India draws red lines for trade deal, ball in US court ahead of July 9 deadline

India has drawn its red lines on the agriculture and dairy sectors for a proposed interim trade agreement with the United States, and the ball is now in Washington's court to finalise the deal, reported PTI, citing people familiar with the negotiations.

The two countries have been aiming to announce the deal before July 9, which marks the end of the 90-day suspension period of additional US tariffs announced in April.

“India has drawn its red lines… now the ball is in the US court,” PTI quoted sources as saying.

In April, the US imposed an additional 26% reciprocal tariff on Indian goods but suspended it for 90 days. The baseline 10% tariff remains in effect.

India is seeking a full exemption from the 26% duty, failure of which would see the tariffs come back into force.

In agriculture sector, the US is seeking duty concessions on products like dairy items, apples, tree nuts, and genetically modified crops.

However, being a politically sensitive sector, it will be difficult and challenging for India to provide any concessions in the agri sector.

India has not opened up the dairy sector for any of its trading partners in free trade pacts the country has signed so far.

Commerce Minister Piyush Goyal last week said India would only sign an agreement that is fully finalised, properly concluded, and in the national interest.

"National interest should always be supreme. Keeping that in mind, if a deal is made then India is always ready to deal with developed countries," Goyal had said on July 4.

India and the US began negotiations for a bilateral trade agreement in February, targeting a first-phase deal by fall.

Ahead of that, both sides have been working on an interim pact.

The Indian team, led by chief negotiator Rajesh Agrawal, returned from Washington last week after holding talks with the US on an interim trade pact.

On Sunday, President Donald Trump said the US was close to finalising multiple trade deals and would notify countries of higher tariff rates by July 9.

Commerce Secretary Howard Lutnick confirmed that unless talks succeed, the higher tariffs would take effect on August 1.

Trump had announced a 10% base tariff in April, with additional duties of up to 50%, although their imposition was delayed for most nations. He said the higher end of new tariffs could range between 60% and 70%.

The US is India’s largest trading partner. Bilateral goods trade stood at $131.84 billion in 2024-25, with India exporting $86.51 billion worth of goods and importing $45.33 billion, resulting in a $41.18 billion surplus. Services trade between the two countries is estimated at $70.5 billion this year.

Major Indian exports to the US include drug formulations, telecom equipment, gems and jewellery, petroleum products, and ready-made garments. Key imports include crude oil, petroleum products, coal, diamonds, electrical machinery, and aircraft parts.

India has received $70.65 billion in foreign direct investment from the US since 2000, making it the third-largest investor.