India is hoping that an early trade deal with the US – being negotiated during the ongoing 90-day tariff pause period – will help the country gain exemption from the full US reciprocal tariff of 26 per cent, including the 10 per cent baseline tariff already imposed. However, additional concessions are currently ruled out, according to sources. “At present, the Trump administration requires approval from the US Congress to bring tariffs below the MFN (most-favoured nation) rates which are the standard tariff rates. But the administration has the authority to remove the reciprocal tariffs as it is over and above the MFN. So, in the early trade deal, which will be an interim pact, India wants exemption from the entire 26 per cent, including the 10 per cent baseline tariffs, as that is within the purview of the Trump government,” a source tracking the matter told businessline. However, New Delhi will demand market access for its labour-intensive sectors in the extended negotiations, which will take place for the first full tranche of the bilateral trade agreement (BTA), which has a deadline of September-October 2025. “We will ask the US to explain to us how it plans to go about seeking trade promotion authority from the US Congress that will allow it to give India concessions by bringing down tariffs below MFN rates,” the source said. The US has sought tariff breaks and other concessions from India in a number of sectors such as automobiles, motorcycles, alcohol, medical equipment and a variety of agricultural products, some of which New Delhi may have to give as part of the interim deal. Washington also wants digital trade, including data localisation rules, to be part of the early trade pact, the source added. “Commerce Minister Piyush Goyal has had fruitful talks with US Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer in Washington this week. The two negotiating teams are holding their meetings now. Hopefully, an early deal will be struck before the 90-day tariff pause period ends on July 8,” the source said. On April 2, US President Donald Trump announced reciprocal tariffs on most countries that have trade surpluses with the US, including India which got slapped with 26 per cent levies. He then paused the tariffs for 90 days to give time for trade deals, but imposed a baseline tariff of 10 per cent on all countries. “If India manages to avoid the reciprocal tariffs, it will gain an advantage over its competitors such as Vietnam, Bangladesh and Indonesia, who have been hit by reciprocal tariffs higher than India. These countries are also trying to strike a deal with the US by giving concessions, so it is kind of a race,” an industry source said. More Like This Published on May 21, 2025