New Delhi: The ongoing trade negotiations between India and the United States have been extended into next week, as both countries grapple with key disagreements on tariff cuts and market access. The talks, which were originally scheduled to conclude on Friday, will now continue on Monday and Tuesday. The delay underscores the complexity of reaching a mutually beneficial agreement before the 9 July deadline.

The negotiations, led by senior officials from both nations, including Rajesh Agrawal on the Indian side, aim to achieve an interim trade deal. This interim deal is a crucial step in the broader goal, set by President Donald Trump and Prime Minister Narendra Modi in February, to double bilateral trade to $500 billion by 2030. A key focus of the discussions is on lowering tariffs and non-tariff barriers, as well as strengthening supply chains.

However, significant hurdles remain, threatening to derail progress. One major sticking point is India’s steadfast refusal to open its farm and dairy sectors fully. India’s concerns centre on the potentially devastating impact of subsidised US agricultural imports on its domestic small farmers. This resistance is a substantial barrier to a comprehensive trade agreement.

Adding further complexity is India’s declaration that it reserves the right to escalate the matter to the World Trade Organisation (WTO) if the ongoing negotiations fail to address existing US tariffs on steel and aluminium. The uncertainty created by these ongoing trade tensions is already having a tangible impact on trade flows. Many Indian exporters are delaying shipments, fearing potential tariff hikes and delays. This pre-emptive caution is reflected in the significant surge in Indian exports to the US during the first four months of the year.

From January to April, exports jumped by 28% year-on-year, reaching $37.7 billion. Much of this increase is attributed to a front-loading strategy, with Indian exporters attempting to ship goods before any potential tariff increases take effect. Imports from the US also increased during this period, reaching $14.4 billion, further widening India’s trade surplus. The outcome of these extended negotiations remains uncertain, with the 9 July deadline fast approaching and significant disagreements yet to be resolved.