India-US trade likely to settle for 10-15% tariff in interim trade deal
NEW DELHI : The July 31 deadline for the ongoing trade negotiations between the US and India approaches, both sides are reportedly converging on a modest 10–15 percent US tariff on Indian imports—avoiding the steep 27 percent reciprocal tariff previously announced by US President Donald Trump, which is set to take effect on August 1, 2025.
India is actively working to reduce or avert the proposed tariff hike. According to reports, Indian officials are seeking terms at least on par with or better than those secured by countries like Indonesia and Vietnam, which negotiated final rates closer to 19–20 percent. In exchange for the US lowering or dropping its planned duties, India is offering tariff cuts on US industrial goods and even proposing a zero-for-zero agreement on auto parts.
The US was initially considering imposing a 27 percent import tariff on Indian goods as part of its broader trade strategy under the Trump administration’s “Liberation Day” policy. While a base 10% universal tariff has already been introduced across most US imports, India ha s been listed for a higher “reciprocal” tariff rate of 27%. This follows the earlier suspension of the tariff, which was supposed to take effect on July 9, to allow time for negotiations between the two countries.
However, the US President Donald Trump has signaled optimism about a deal, stating that a “very close” agreement is in progress. He hinted that the tariff on Indian goods could end up being around 10–15%, in line with other “smaller countries,” rather than the initially proposed 27%. However, this depends on the outcome of the negotiations, which are expected to conclude before the August 1 deadline.
Until a final decision is reached, Indian exporters in sectors like electronics, auto components, and agriculture are facing uncertainty. Many businesses have delayed shipments and new orders, awaiting clarity on the final tariff structure. A scaled-down trade pact focused on key sectors may be signed in the final days of July, which could prevent the full tariff from being implemented.
For now, the situation remains fluid. If no agreement is reached by August 1, Indian goods could be subject to the full 27% tariff, which may significantly impact trade flows and pricing across several industries.