India-U.S. Interim Trade Deal Unlikely Before August 1 as Talks Remain Deadlocked

 The likelihood of an interim trade agreement between India and the United States being finalized before Washington's self-imposed August 1 deadline appears increasingly remote, as negotiations remain at an impasse over tariff reductions on key agricultural and dairy products, according to two Indian government officials familiar with the matter.

U.S. President Donald Trump, in April, threatened to impose a 26% tariff on Indian imports, but temporarily held off to allow space for negotiations. That moratorium is set to expire on August 1. While over 20 countries have already received formal tariff notices from Washington, India has not yet been officially notified.

India’s trade delegation, led by chief negotiator Rajesh Agrawal, recently returned from Washington following a fifth round of discussions, which ended without a breakthrough.
“An interim deal before August 1 now appears unlikely, though virtual discussions are still ongoing,” said one of the officials, adding that a U.S. delegation is expected to visit New Delhi shortly to continue the dialogue.

At the heart of the deadlock are India's reluctance to open up its politically sensitive agriculture and dairy sectors, and Washington’s refusal to offer concessions on the elevated tariffs affecting Indian exports of steel, aluminium, and automobiles.

According to the second official, both sides are examining whether contentious issues can be set aside for resolution in a future phase, allowing a limited interim deal to proceed in the meantime.

Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), warned that sectors such as gems and jewellery could face significant disruption if the proposed 26% tariffs are imposed.
“However, such measures may be short-lived, as both governments remain committed to securing a comprehensive agreement in due course,” he noted.

Speaking to CNBC on Monday, U.S. Treasury Secretary Scott Bessent emphasized that the administration is prioritizing the substance of trade agreements over the speed at which they are concluded. When asked whether the August 1 deadline could be extended for countries engaged in active negotiations, he said the decision ultimately rests with President Trump.

Despite current hurdles, Indian officials remain hopeful of securing a broader deal by September or October, as initially envisioned during Prime Minister Narendra Modi’s February meeting with President Trump.

“With five rounds of negotiations already behind us and another U.S. delegation expected soon, we remain optimistic about concluding a mutually beneficial trade pact,” said a third government source.

Both the Indian Ministry of Commerce and the Office of the U.S. Trade Representative declined to comment when contacted by email. The officials quoted requested anonymity as the discussions are not yet public.