India, US Edge Toward Trade Deal as Tariff Deadline Looms

Talks are in the “last one percent,” officials say, but forced-labour guarantees and tariff parity with Asian rivals remain unresolved before the July 22 cut-off

India and the United States are racing to close the first tranche of a long-negotiated bilateral trade agreement before a self-imposed deadline expires on July 22, when a temporary 10 per cent additional duty on Indian goods entering the US is due to lapse one way or another. Negotiators on both sides say the broad architecture of the deal is settled, with only a handful of contentious clauses left to iron out.

US Trade Representative Jamieson Greer travelled to New Delhi in late June for what both governments described as a final round of consultations. Sergio Gor, the US Ambassador to India, told reporters afterwards that the two countries were “in the final steps on this deal… it’s in the last 1 percent,” language that officials on the Indian side have not disputed. Commerce ministry sources in Delhi say a joint statement, rather than a fully signed text, is the more likely outcome by the deadline, with technical annexes to follow through the rest of the year.

The current round builds on a framework Prime Minister Narendra Modi and President Donald Trump announced on February 2, when Washington agreed to cut its reciprocal tariff on most Indian goods from 50 per cent to 18 per cent. In exchange, India committed to halt purchases of Russian crude, move toward zero tariffs on a range of US goods, and pledged to import more than $500 billion worth of American energy, aircraft, precious metals and technology products over five years. That framework lowered the immediate temperature in a relationship that had been strained for much of the past year, but it left several irritants for this later round of talks to resolve.

Two issues are proving stickiest. New Delhi wants its residual tariff rate brought down further, arguing it should not face steeper duties than competing Asian exporters such as Vietnam and Indonesia, which have secured more favourable terms in their own agreements with Washington. The US side, in turn, is pressing India for firmer guarantees that its export supply chains, particularly in textiles, seafood processing and low-cost manufacturing, are free of forced or bonded labour, a demand that has taken Indian trade negotiators somewhat by surprise given it was not a prominent feature of earlier rounds.

For India’s exporters, the stakes are considerable. The commerce ministry has set a target of $1 trillion in overall exports for the 2027 financial year, built on an assumption of 17 per cent growth in merchandise shipments, much of which depends on stable and predictable access to the US market, still India’s largest single-country export destination. Sectors from pharmaceuticals and engineering goods to gems and jewellery have been recalibrating shipment schedules through the summer in anticipation of whatever tariff structure emerges after July 22, with several exporters reporting a rush of front-loaded shipments in June and early July to avoid any interim gap in coverage.

The broader diplomatic context also matters. Ties between Delhi and Washington had cooled sharply in 2025 over tariff threats and disagreements on Russian oil purchases, prompting India to lean harder into trade diversification through agreements with the European Free Trade Association, Oman, and a UK pact expected to take effect later this year. A durable US deal would not reverse that diversification, but trade officials in Delhi say it would remove the single biggest cloud hanging over exporters’ planning for the year ahead, and restore a degree of predictability that has been missing from the relationship since early 2025.

Whether the two sides make the July 22 date or need a short technical extension, both governments have signalled they intend to treat any agreement as a living document, with further rounds expected later this year to address market access for agricultural goods and digital trade rules that remain outside the scope of the current text.