India, US race to finalise trade deal before August tariff hike

India and the US have concluded the fifth round of negotiations for the proposed bilateral trade agreement (BTA) in Washington, an official said.

The talks, which took place from July 14 to 17, covered issues related to agriculture, automobiles and the export of dual use items called SCOMET (special chemicals, organisms, materials, equipment and technologies). These products have both civilian and military use.

"The Indian team is coming back. This round of talks has ended," the official said.

The latest round of negotiations is significant as both sides aim to finalise an interim trade deal before August 1 as after that the US' additional tariffs of up to 26% would come into force. The two sides aim to conclude the first tranche of a bilateral trade agreement by September-October.

US President Donald Trump said a trade deal with India would be on the "same line" as that with Indonesia, which will face a 19% tariff, suggesting that New Delhi, too, may be subject to tariffs above the baseline 10%.

India will host the 2025 summit of the four-member Quad grouping, also comprising the US, Australia and Japan, later this year. Trump is set to attend the summit and efforts are on to secure a deal before that.

India is demanding greater market access for labour-intensive industries such as textiles and electronics while the US wants steep cuts in tariffs across sectors including cars and access for its dairy and farm products.

India is firm on not opening its farm and dairy sector to any country.

As part of the proposed trade pact, India is pushing for the removal of the additional 26% tariffs, along with reductions in duties on steel and aluminium (currently at 50%) and the automobile sector (25%). The country has also reserved its right to impose retaliatory duties under World Trade Organization norms.