DBS economist Radhika Rao reports that India and US are close to formalising an interim trade agreement under a new framework first agreed in February. She notes India’s push for tariff advantages versus regional peers, evolving US tariff structures, ambitious purchase commitments, and India’s aim to secure better terms to boost bilateral trade and investment.

Interim agreement nears under new framework

"The India–US trade framework, initially agreed upon in February, is now in the final stages of being formalized through an interim trade agreement."

"The government has pushed for comparative tariff advantages vs regional manufacturing peers and sought assurances that the US administration will not levy higher duties once the deal is sealed."

"There has been notable change in the tariff backdrop after the court overruled the IEEPA tariffs earlier in the year, which was replaced by a 10% blanket rate until 24-July, while Section 301 investigations point to 10-12.5% tariff on selected product groups."

"US Trade Representative Jamieson Greer will reportedly be in India on June 23-24 to close discussions, with India’s authorities likely to emphasise on better terms than February to get a larger bite in bilateral trade and investment commitments."

"US officials had previously suggested that India had committed to buy $500bn worth of US products in the future, implying a ~9x increase vs FY26 run rate that seems to be a tall order."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)