Indian officials are trying to secure a trade deal with the US before an August 1 deadline, and they’re hoping to get better tariff rates than Indonesia. US President Donald Trump recently announced a 19% tariff on Indonesian goods, which is lower than the earlier threatened rate of 32%. In return, the US will be able to send goods to Indonesia without paying tariffs. Trump later said the deal with India would be "along the same lines" and that the US would gain better access to the Indian market.

India wants a better deal

According to government officials in New Delhi, India is aiming for a lower tariff than Indonesia's 19% or Vietnam’s 20%. They believe this would give India a competitive edge over other Asian countries. One official said that India isn’t seen as a transhipment hub like Vietnam, so there's a chance the US may offer India a slightly better rate. A group of Indian negotiators is currently in Washington to push the talks forward.

Hoping for below 10% tariff

Soumya Kanti Ghosh, chief economist at the State Bank of India and part of the PM’s advisory team, said India might try to bring the tariff down to below 10%. But for that, the US would expect India to allow more American products into its market.

India is not ready to open up its agriculture and dairy sectors, but it might make some concessions in other areas, like industrial goods.

What India is offering

India has already proposed to:

  • Remove tariffs on US industrial goods if the US does the same
  • Allow more American farm products into India.
  • Buy more Boeing planes from the US.

Meanwhile, Trump has made similar deals with other countries, including the UK, Vietnam, and even a temporary truce with China. Indonesia, for example, has agreed to buy $15 billion worth of US energy and $4.5 billion in agricultural goods, along with aircraft.

What experts say 

Economists believe Trump’s preferred tariff rate is between 15% and 20%, and that the letters threatening higher tariffs are just a way to pressure countries to offer better deals to the US. Malaysia, which is still in talks with the US, is watching the Indonesia deal closely.The trade minister said that any agreement must be beneficial for both countries and must be a “win-win” situation.

In simple terms, India is in a hurry to sign a trade deal with the US and wants it to be better than what Indonesia and Vietnam got.Both sides are negotiating hard, and the outcome could shape future trade relations in the region.