US, India close to interim trade deal that could cap tariffs below 20%

New Delhi: The United States and India are reportedly nearing an interim trade agreement that could cap proposed tariffs at below 20%, in what may become a significant milestone in bilateral trade relations, according to a Bloomberg report.

Citing sources familiar with the discussions, the report states that India may avoid receiving a formal demand letter on tariff changes, unlike several other nations. Instead, the two countries are expected to issue a joint statement in the coming days once final ministerial-level clearances are secured. The interim framework aims to set a mutually agreeable tariff threshold while deferring more contentious issues to a broader trade negotiation scheduled for later this year.

The development comes at a critical time when Washington is looking to secure early trade wins through a series of targeted deals. India has reportedly shown willingness to reduce duties on a range of non-sensitive imports, including energy products, electronics, and auto parts, while holding firm on protections for sensitive sectors such as agriculture, dairy, and grains.

From Washington’s perspective, the goal is to establish a baseline of market access while easing tensions from previous tariff escalations. During the Trump administration, India had imposed reciprocal tariffs reaching as high as 27% following US trade threats. The proposed sub-20% tariff cap signals a marked shift toward de-escalation.

For India, avoiding sharp duty hikes offers predictability and breathing room to continue shielding key domestic sectors. Analysts believe the sub-20% threshold puts India in a better position compared to several other Asian economies currently negotiating under more aggressive US trade terms.

The upcoming announcement is expected to highlight both countries' intent to forge a more resilient and pragmatic economic partnership. While this interim deal addresses tariff structures, deeper concerns, including non-tariff barriers, investment norms, and sectoral alignment, will be taken up during fall negotiations.