India and the United States are likely to make a limited trade deal announcement as early as mid July, a July 14, 2025, SBI Research note states. New Delhi has made what officials call a “decent offer” for bilateral goods trade worth between $150 billion and $200 billion. If the accord collapsed, India would have the risk of a 10% increase in tariff on its exports, but experts think New Delhi has enough leeway to counter this through diversified markets and goods.
Scope and Stakes
Though a pact would put existing tariff rates on ice, an impasse would drive American levies on Indian products above those on most other Asian nations. Nonetheless, India’s rapidly expanding services sector, which hit an all-time high of $387.5 billion in exports during 2024-25, driven by IT and financial services, should absorb the blow to merchandise exports.
Opportunities in Chemicals and Apparel
The United States imposes higher reciprocal tariffs against China and Singapore than against India, especially in chemicals and drugs. If India is able to acquire tariff reductions comparable to or lower than Singapore’s 25% rate, it would be able to gain more market share and increase GDP by as much as 0.2%. So too with apparel, India represents only 6% of U.S. imports; capturing a humble five-point share from Bangladesh, Cambodia and Indonesia could add to India’s GDP by about 0.1%.
ASEAN and Beyond
Outside the U.S. market, India can build stronger relations with ASEAN countries and stem the deluge of Chinese products transhipped through the region. Ministers are considering reforming the ASEAN India Free Trade Agreement to remove tariff distortions and make rules of origin stricter to shield domestic industries and check dumping.
Agriculture and Dairy Dispute
One of the major sticking points is agriculture, especially dairy. The heavily subsidized and growth hormone-intensive U.S. dairy industry spells doom for rural livelihoods and Indian public health norms. According to SBI Research, opening the dairy market to U.S. imports could reduce domestic milk prices by 15%, causing annual income losses of ₹1.03 lakh crore to Indian farmers and rising volumes of imports by 25 million tonnes.
As New Delhi and Washington negotiators ready to seal terms, India is looking to protect its strategic interests while unlocking new export possibilities in goods and services. The decision will determine the future of the world’s two fastest-growing economies for decades to come.
