The trade talks between India and the US have reached their final decisive phase in Washington, DC. What policymakers now hope to materialise are its three implicit assumptions—the most important one being a steady differential between the US tariff on China and India. New Delhi is confident that Washington, DC will maintain a differential of 10 to 20% in tariff between China and countries such as India.

“The deal needs to be clinched precisely for this gap to be maintained,” the concerned official said, according to whom the US is also pushing hard for market access in politically sensitive sectors such as agriculture and dairy. However, another section of officials also reckoned it is important to ensure a good differential between the US tariffs on China and India. And for this to happen, a deal is vital.

“The question is whether the Indian negotiators would have to settle for a limited, early harvest type of deal or would have to turn away from the negotiations. For now, let the July 9 deadline pass and then rebuild efforts to bridge the gaps. A full-scale deal looks out of the question for now,” said another concerned official, with experience in bilateral trade negotiations.

India’s Increasing Openness

There is now an increasing realisation that cutting tariffs across segments—especially intermediate goods—might be a net positive for New Delhi. India had last-minute reservations about signing the Regional Comprehensive Economic Partnership (RCEP), a trade deal among Asia-Pacific countries that includes China.

However, now India’s policy circles are more willing to cut tariffs on some industrial goods, including automobiles and some agri-products of interest to the Americans, such as apples, diamonds, walnuts, avocados, and spirits. The country is also more open on the genetically modified food issue. Additionally, India has headroom to import more from the US, especially in three sectors: crude oil, defence equipment, and nuclear.