Thus Far & No Further: India Stands Firm Over US Trade Deal

That's why the last week of July will go down in history.

It could also form the cornerstone of all Indo-US ties — definitely for the near future — unless the slide is arrested soon. Ill-advised by his close coterie in Washington, Trump has played the Pakistan card without realising that no Indian government — irrespective of the dispensation in power — will enter into a deal if arm-twisted on the sensitive issue.

Untrustworthy Partner?

Indian polity and society at large have often felt that the US can never be fully trusted, and Trump’s decisions have reinforced that belief.

While Trump is looking for a trade deal to make global headlines, India is cautious. It aims to establish all necessary legal instruments to safeguard the interests of key sectors — including agriculture, dairy, and micro, small, and medium enterprises (MSMEs) — which form the backbone of its economy.

The government will also act to ‘secure national interest’ and remain committed to the welfare of farmers, entrepreneurs, and MSMEs. After all, India's agriculture and allied sector provides the livelihood to nearly half the country’s 144 crore population, either directly or indirectly.

In a statement, New Delhi-based think tank Global Trade Research Initiative (GTRI) said that by refusing to cross its red lines, particularly on agriculture, India has avoided “the trap of a one-sided deal”.

“India’s tariffs are WTO-compliant, non-tariff barriers are common globally, and discounted Russian oil has helped India manage inflation during global volatility... India is not alone; over 90 countries face similar US pressure. A deal may still emerge, but only on fair terms. For now, India’s principled stand has avoided the trap of a one-sided deal, and that’s a success,” the GTRI said.

For India, additional tariffs on steel and aluminium, over and above the baseline, are not welcome. New 50 per cent tariffs on copper products from August 1 are a challenge for India, which exported US$ 2 billion worth of copper and copper products globally (including US$ 360 million to the US), in 2024-25.

India Vs US: Principle Vs Petulance

Trump’s adamant position on 'zero duty' access to the Indian markets, like his deals with Vietnam and Indonesia, is also a challenge.

Some sectors, like textiles, automobiles, oil and gas, and pharmaceuticals, are likely to be more vulnerable to the new tariffs. There is no clarity on the impact of tariffs on the auto sector, as it was already subjected to 25 per cent tariffs. The pharma sector, too, may not be immediately impacted.

In the absence of overnight alternatives for generic drugmakers, the US is not likely to impose tariffs on Indian pharma, as healthcare costs in the US would rise significantly.

While India remains engaged with the US over concluding a fair-trade deal, the immediate impact of 25 per cent tariffs may not be a big setback for the Indian economy. The GDP loss is not likely to exceed 0.2 per cent, according to some experts.

India could be ready to reduce tariffs on some industrial goods, besides granting concessions in sectors such as public procurement, provided these are matched by the US, as in the case of the India-UK trade deal. 

The US is India’s largest trading partner, and has been so for four years now. Bilateral trade in 2024-25 was valued at US$ 132 billion. An announcement on the deal is expected by September-October. An interim draft could be ready by this month-end, or by early September.

India does not want to rush into a deal with the US, as most of the countries that have done so — including developed economies — have ended up with half-baked agreements that effectively extracted more than what they gave. This includes the UK and Australia, both of which have trade deficits with the US.