India, US may strike mini deal by March as tariff relief looms

India and the US are nearing an agreement on an interim trade deal that officials said could be finalized by March, with New Delhi’s top trade negotiator due in Washington next week to iron out legal text and Washington poised to cut tariffs that have hit Indian exports hard.

The expected “mini deal” comes against the backdrop of a sharp widening in India’s trade deficit in January, reflecting the impact of elevated US tariffs that reached 50% late last year and a slump in shipments to the world’s largest market.

Commerce Secretary Rajesh Agrawal said on Monday that India’s chief trade negotiator will travel to Washington “next week” to finalize legalities for an interim trade agreement under the framework Washington and New Delhi agreed upon earlier this month. The pact is expected to be wrapped up by March, opening the way for tariff relief on both sides.

Under the interim framework agreed in early February, the US committed to reducing its reciprocal tariff on Indian goods to 18%, down from punitive rates imposed last year, in exchange for India’s wider import commitments, including energy and machinery, and deeper cooperation on non-tariff barriers.

For Indian exporters, the potential tariff relief is significant. Exports to the US, long a standout market, have tumbled in recent months as duties spiked, contributing to a trade gap that hit a three-month high in January with exports sliding sharply.

Despite progress in talks, the pact has ignited opposition from key domestic constituencies. Thousands of farmers have protested in several states, accusing the government of agreeing to terms that could expose Indian agriculture to cheap imports and weaken rural livelihoods. Opposition politicians and unions have amplified those concerns, framing the deal as compromising domestic interests.

The government has pushed back, saying the interim framework excludes the bulk of staple farm products and protects sensitive segments, while highlighting potential gains for sectors such as textiles and chemicals that have borne the brunt of high US tariffs.

The potential mini deal is part of a larger effort to reset trade ties between the two democracies after months of tariff tensions that disrupted commerce and prompted New Delhi to diversify markets and strengthen ties with Europe and other partners.

An India-EU free trade agreement was finalized in late January, positioning improved market access with Europe even as New Delhi navigates the complexities of its Washington engagement.