India likely to wait for US tariff decision before sealing trade deal

India is likely to finalise its proposed trade agreement with the United States only after the outcome of ongoing Section 301 investigations, government sources said, adding that the US Trade Representative's final order will determine the tariff treatment applicable to Indian exports once a deal is concluded.

Sources said the period for completing the Section 301 probe has now narrowed to about 30 days. They added that if the proposed trade deal is not finalised before the current US tariff regime expires on July 24, India's exports would be subject to the applicable Most Favoured Nation (MFN) tariff rates.

The Section 301 investigation stems from a US probe into alleged forced-labour practices in global supply chains. Under a proposal currently under consideration by the Office of the US Trade Representative (USTR), India could face an additional tariff of up to 12.5% on certain exports if Washington determines that adequate measures have not been taken to prohibit imports made with forced labour. Public hearings on the proposal are scheduled to begin on July 7.

The Commerce Ministry has said India remains engaged with the United States on both the Section 301 issue and the broader trade negotiations.

"India is also parallelly engaged with the US for finalisation of a framework agreement as was announced on February 2 and in accordance with the joint statement released on February 7," the ministry had said earlier.

Trade talks between the two countries have gathered pace in recent weeks.

Commerce and Industry Minister Piyush Goyal recently said India and the United States held "excellent discussions" between June 2 and June 4, with a full US trade delegation visiting New Delhi to advance negotiations.

According to Goyal, both sides are moving quickly to resolve the remaining issues and could be in a position to execute the first tranche of the bilateral trade agreement by the middle of next month.

He described the proposed arrangement as the first phase of a broader trade pact that could provide Indian exporters preferential access compared with competing countries. A higher-level US delegation is also expected to visit India later this month.

The Commerce Ministry said discussions with the visiting US delegation were constructive and covered areas including trade in goods, non-tariff barriers, customs and trade facilitation, and economic security cooperation.

India and the United States had announced a framework for an interim trade agreement in a joint statement issued on February 7, reaffirming their commitment to negotiating a comprehensive bilateral trade agreement.

Last month, US Ambassador to India Sergio Gor said the two countries were close to finalising an interim trade deal, claiming that only a small portion of negotiations remained unresolved.

Echoing that assessment, Goyal said most issues had already been settled and that discussions were focused on final legal and technical details. Government sources indicated that securing relief from potential Section 301 tariffs and obtaining preferential market access for Indian exports remain key priorities in the negotiations.

Sources added that USTR chief Jamieson Greer could visit India once the broad contours of the agreement are finalised.