India has presented a set of core demands in its ongoing bilateral trade negotiations with the United States, including preferential tariff rates, assurances against future tariff hikes, and the resolution of a contentious forced labour investigation, according to a senior Indian trade official who spoke on condition of anonymity.
India's Core Demands
The official told Reuters that New Delhi is seeking "competitive" tariff rates that match those offered to India's direct competitors, as well as a guarantee that any signed agreement would shield India from future US tariff measures. "Once we have that tariff, we can finalise a trade deal with the US. But obviously the rate has to be competitive with direct competitors," the official said.
A key sticking point is the ongoing Section 301 investigation by the Office of the United States Trade Representative (USTR), which has named India among countries allegedly engaging in unfair trade practices, including forced labour and excess industrial capacity — particularly in the textiles sector. India is pressing for the investigation to be dropped or its findings neutralised as part of the deal.
Section 301 Tariff Threats
The USTR has proposed an additional 12.5% tariff on imports from India and several other countries over forced labour concerns, the official confirmed. A separate tariff is also being considered targeting Indian textile exports, citing excess capacity and alleged harm to US manufacturers.
| Issue | US Proposal / Action | India's Position |
|---|---|---|
| Forced labour (Section 301) | Additional 12.5% tariff | Demand investigation be dropped |
| Excess textile capacity | Additional tariff under review | Seek exclusion from measures |
| Future tariff measures | No explicit proposal | Seek binding assurances of no future hikes |
| Preferential tariff rates | Not yet specified | Demand rates competitive with other trading partners |
Bilateral Timeline and Talks
Commerce and Industry Minister Piyush Goyal said last week that the first tranche of the bilateral trade agreement could be finalised by mid-July. An initial understanding was reached in February, but negotiations slowed after US President Donald Trump's sweeping tariff measures were struck down by the US Supreme Court.
Momentum regained last week when a US delegation led by Assistant US Trade Representative for South and Central Asia Brendan Lynch held three days of talks in New Delhi with Indian officials. The dialogue covered the spectrum of trade irritants, including the pending Section 301 findings.
"Once we have that tariff, we can finalise a trade deal with the US. But obviously the rate has to be competitive with direct competitors." — anonymous Indian trade official to Reuters
The official emphasised that the proposed bilateral trade agreement may only be finalised after Washington concludes its Section 301 investigations and addresses India's requests for tariff certainty. For Indian exporters, particularly in textiles, the outcome will determine whether they face punitive tariffs or gain market access on competitive terms.
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