India says trade pact with US should give preference to labour-intensive items like textiles and leather

India wants a trade deal where it would get market access in its areas of interest, including labour-intensive goods, say sources
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REUTERS/FRANCIS MASCARENHAS

The proposed India-US bilateral trade agreement (BTA) has to necessarily give preference to India in the areas of its interests — in labour-intensive items such as textiles and leather — to help it beat competition in the American market, a top source has said.

“It is not possible to clap with a single hand. It takes two. India wants a trade deal where it would get market access in its areas of interest, including labour-intensive goods, and it should have sustained preference over other countries in these areas,” a source tracking the matter told businessline.

India’s team of negotiators recently returned from Washington DC after parleying hard with counterparts in the US for about a week but not managing to seal a deal by the end of it.

There were hopes that an interim trade deal would be agreed to by the two countries before July 9, when the 90-day pause period on US reciprocal tariffs end. 

“The ball is now in the US’ court as India has already offered to bring down tariffs in a number of sectors for American goods while insisting that its red lines in sensitive areas, including agriculture and dairy, be respected,” a second source said.

US President Donald Trump said he will now be sending out letters to trade partners with which trade deals could not be struck specifying the tariffs that would now be imposed on their products.

“We have absolutely no idea what the letters would be about and how the tariffs would be calculated. Also there is no clarity on how these new tariffs would be related to the reciprocal tariffs,” the source said.

On August 2, US President Donald Trump had announced reciprocal tariffs for most trade partners with which the US had a trade deficit. The tariff rate, which varied for different countries depending on the level of deficit, was fixed at 26 per cent for India. This tariff was then suspended for a 90-day period, till July 9, expect a base tariff of 10 per cent, to give time to countries to work out trade deals with the US.

Trump said that he had already signed 12 letters that would be sent out on Monday and all other countries would get letters by July 9.

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Published on July 6, 2025