New Delhi is reportedly resisting the proposed 18% tariff rate as political concerns complicate negotiations ahead of the US midterm elections
India’s interim trade deal with the US remains stalled as New Delhi reportedly refuses to accept a proposed 18% tariff rate and weighs politically sensitive agricultural concessions ahead of next month’s US midterm elections.
India wants to retain the current additional 10% levy on covered exports and could reassess negotiations after the November 3 elections, the Hindu BusinessLine reported on Sunday, citing sources familiar with the talks.
Under a framework agreed in February, Washington proposed reducing tariffs on several categories of Indian goods to 18%, from penalties of up to 50% imposed last year. In return, India agreed to lower duties on US industrial goods and selected agricultural products.
However, the negotiating landscape changed after the US Supreme Court struck down President Donald Trump’s sweeping emergency tariffs later that month. Washington subsequently imposed a separate additional 10% duty on covered Indian imports under Section 301 of US trade law.
Around 55% of India’s exports to the US are subject to the additional levy, while products including generic pharmaceuticals and smartphones remain exempt, according to India’s Commerce Ministry.
New Delhi is seeking assurances that future US tariffs will not leave its exporters at a disadvantage to competitors in Vietnam, Bangladesh, and Indonesia, the BusinessLine reported. India also wants protection against further duties after an agreement is signed.
Agricultural market access remains another obstacle to finalizing the deal. Washington is seeking concessions on American farm products, including those from Republican-leaning states, while India has sought to protect sensitive sectors such as dairy, poultry, rice, and wheat.
Granting such concessions while accepting higher tariffs would be difficult to defend domestically, sources told BusinessLine. New Delhi is therefore reportedly inclined to wait until after the US elections before deciding how to proceed.
The deadlock comes despite US Secretary of State Marco Rubio saying last week that 99% of the agreement was complete and that a deal could be finalized within weeks.
Trump also described the negotiations as “pretty close,” even as Indian Foreign Minister S. Jaishankar cautioned that the remaining stages could prove difficult.
Trump waived key Russia-related sanctions and tariffs earlier this month, easing a major obstacle to the negotiations. However, a separate US investigation into alleged industrial overcapacity remains unresolved, leaving uncertainty over possible future duties on Indian goods.
