Indian mandarins are still feverishly working on a ‘good trade deal’ with the United States, which the President Donald Trump promised at Davos.
Top Commerce Ministry officials said the deal “was almost done”, but sticking points on farm trade, a key concern for both sides, are still to be hammered out with bureaucrats and trade experts burning the midnight oil.
President Trump’s calling Prime Minister Narandra Modi “a good friend” and predicting a “good deal” are being seen by both sides as a signal that a breakthrough at the highest level is possible.
“What has given the trade pact an extra momentum is USA’s invitation to India to join its Pax Silica’ alliance … this we see as a significant political signalling and could help smoothen out differences over trade matters … but, of course, they are tough bargainers, and we will continue to talk,” said officials.
The Pax Silica is a strategic alliance launched last December to secure global silicon supply chains for Artificial Intelligence, semiconductors, and critical technologies, in a bid to counter China’s dominance. New Delhi has been formally invited to join as a full member next month.
“We have agreed on a number of issues, but differences remain,” said Pinak R Chakravarty, former Secretary – Economic Relations in the Ministry of External Affairs.
Trade negotiators said there is convergence on substantial duty reductions on automobiles, electronics, electronic medical devices, and a host of high-end US farm products.
As sweeteners India has been offering off-pact deals of greater market access for defence products, and more purchases of US crude oil even as it has signalled lower purchase of crude from Russia.
“Where we have been stuck on is agricultural tariffs – they want to enter our foodgrain market. Wheat, rice … as also our dairy sector. What we want to do is to safeguard the livelihood of millions of small farmers who live off these crops and products,” said Prof Biswajit Dhar, formerly of the Indian Institute of Foreign Trade, who has been part of WTO negotiations in the past.
India sold about USD 100 billion worth of goods to the US despite tariff uncertainties during 2025 compared to USD 87.34 billion in 2024 according to
US government data and economic estimates. The US had a trade deficit with India of over USD 45 billion in calendar year 2024, and this is expected to be over USD 50 billion in 2025.
Both Chakravarty and Dhar as well as officials involved in the high stakes trade negotiations, felt the tariff cuts proposed including on pulses, certain dairy and farm products and the defence purchases of drones, high tech jet fighters and radar systems should go a long way in reducing the deficit considerably “but not in its entirety”.
Earlier in August last year, the United States tried to hasten the pact and imposed a 50 per cent tariff on Indian imports, blaming India’s purchase of huge amounts of Russian oil, which has been sanctioned by the west in a bid to end the war in Ukraine, though analysts attribute the tariff hikes to an attempt to get India to accept terms in the trade deal.
However, analysts also argue that with the US locked in a competition with China for supremacy in the evolving world order, it needs India on its side, especially as relations with Europe, USA’s oldest ally, are also strained.
Relations between the two large democracies have frayed not only over a tariff dispute but also over Trump claiming credit for ending India-Pakistan’s short tit-for-tat missile and drone exchange last year and India insisting that Islamabad came to its senses after Indian missiles took out several air bases and strategic bunkers.
The situation deteriorated further after President Trump invited Pakistan’s military chief gen Asim Munir to the White House less than two months after Pakistan-based terrorists killed 26 people in Kashmir’s Pahalgam valley.
However, as Chakravarty said “Both the US and India need each other and a way will be found to find a solution to the hiccups in a relationship in which both sides have invested in over the last two-and-half decades.” UNI JRC KK Tags: #UNI Special: India#US work overtime to seal ‘Good Trade Deal’ as farm tariffs remains key hurdle