Big Relief For India Soon? US Mulls Interim Trade Deal, May Cut Tariff Below 20%

(MENAFN- Live Mint) India may gain a favourable position among its peers in the South Asian region, with the United States (US) reportedly mulling an interim trade deal that could reduce proposed tariffs to below 20 per cent.

"The US is working toward an interim trade deal with India that may reduce its proposed tariffs to below 20%," people familiar with the matter told Bloomberg on Monday, 14 July.

Earlier, sources had said that India and the US have pushed back their deadline to finalise the trade deal from the earlier 9 July cutoff to mid-July.“We are hopeful of finalising the trade deal by next week, or at the latest, before 31 July,” sources said.

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Until the deal is announced, the tariff on India will remain unchanged at 26 per cent, comprising a 10 per cent baseline duty and an additional 16 per cent, sources said earlier.

It is now being said that the interim deal would allow for continued negotiations, giving New Delhi space to resolve outstanding issues ahead of a broader agreement expected this fall.

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India is unlikely to receive a formal tariff demand letter, unlike many other nations this week, and expects the trade arrangement to be announced via a statement, sources told Bloomberg on condition of anonymity.

They said that the statement would likely set a baseline tariff below 20 per cent, compared with 26 per cent initially proposed, with language that would allow the two sides to continue negotiating the rate as part of the final pact.

The timing of an interim agreement is unclear.

If finalised, India would be on a short list of trading partners that have secured deals with the Trump administration.

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US President Donald Trump has otherwise shocked dozens of trading partners this week by announcing tariff rates of as high as 50 per cent in some cases ahead of an 1 August deadline.

India's Ministry of Commerce and Industry didn't respond to an email seeking further information, and the White House and Commerce Department also did not immediately respond to requests for comment.

Trump earlier told NBC News that he's eyeing blanket tariffs of 15 per cent to 20 per cent on most trading partners who haven't been informed yet of their rates. The current global baseline minimum levy for nearly all US trading partners is 10 per cent.

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Tariff rates announced for Asian nations so far range from 20 per cent for Vietnam and the Philippines to 40 per cent for Laos and Myanmar.

Trump has also threatened additional tariffs over the country's participation in the BRICS group.

A team of Indian negotiators is expected to visit Washington soon to advance the talks.

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India has already presented its best offer to the Trump administration, making clear the red lines it will not cross in finalising an agreement.

People familiar with the matter said the two nations have yet to find a landing zone on contentious issues, including non-tariff barriers in agriculture and regulatory processes in the pharmaceutical industry.

(With inputs from Bloomberg)

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