India is on track to finalise an interim trade deal with the United States as soon as this week to avoid US President Donald Trump’s reciprocal tariffs, the Financial Times reported.
The interim deal with the US would be among the first with a major US trading partner, and would mark an initial step towards a comprehensive bilateral deal between the US and India. The two countries have signalled their intent to finalise the first tranche of the full agreement by autumn.
This comes at a time when the deadline for the Trump tariff nears its end. The 90-day pause was announced on April 9, days after Trump announced sweeping tariffs on more than 100 countries, including India. The US imposed a 26 per cent tariff rate on Indian made goods, as compared to its 52 per cent tariff rate on US-made goods.
On Monday (local time), White House Press Secretary Karoline Leavitt confirmed that a deal between India and the US is to be finalised soon. Reiterating Trump’s stance, Leavitt said, “You’ll hear from the President and his team, his trade team, very soon, when it comes to India.”
Earlier on June 26, Trump confirmed a “very big deal” with India coming soon. This was after he signed a trade deal with China. Speaking at an event, Trump said, “Everybody wants to make a deal and have a part of it. Remember a few months ago, the press was saying, ‘You really have anybody of any interest? Well, we just signed with China yesterday. We are having some great deals. We have one coming up, maybe with India. Very big one. Where we’re going to open up India, in the China deal, we are starting to open up China.”
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According to the Financial Times report, the deal is expected to spare its agricultural markets, including dairy and wheat, from the US tariffs. Citing an Indian government official, the report stated that there is “a lot of sensitivity” over its agricultural markets.
To bring down its trade surplus with the US, India agreed to import more natural gas from the US. The trade surplus for the financial year 2024-2025 stood at $41.2 billion. The two sides have also agreed to reduce tariffs on thousands of items.
The report also stated that India has managed to shield its dairy sector from foreign competition, including talks with the European Union. India’s dairy sector employs over 80 million people. Concerns have been flagged over foreign dairy products, which may come from cows that were raised on feed containing cattle products.
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India’s manufacturing activity grew to a 14-month high in June, marked by “one of the fastest increases” in exports and record upturn in employment, said a private survey on Tuesday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 58.4 in June from 57.6 in May. A figure above 50 denotes expansion in activity while below that signifies contraction. The headline figure has been in the expansion zone for the 48th month running.
“Companies also welcomed one of the fastest increases in external orders in over 20 years of survey history. Goods producers lifted input buying to the greatest extent in 14 months, which supported a further expansion in stocks of purchases," said the survey.
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India’s manufacturing activity grew to a 14-month high in June, marked by “one of the fastest increases” in exports and record upturn in employment, said a private survey on Tuesday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 58.4 in June from 57.6 in May. A figure above 50 denotes expansion in activity while below that signifies contraction. The headline figure has been in the expansion zone for the 48th month running.
“Companies also welcomed one of the fastest increases in external orders in over 20 years of survey history. Goods producers lifted input buying to the greatest extent in 14 months, which supported a further expansion in stocks of purchases," said the survey.
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Production volumes increased at the fastest pace since April 2024, reportedly fuelled by efficiency gains, demand and greater sales volumes. The acceleration was led by intermediate goods makers, however, with slowdowns in the consumer and capital goods segments.
"Indeed, growth of new export orders gained considerable momentum in June. The rate of expansion was the third-highest since data collection started in March 2005. Firms noted strengthening demand from across the globe, with the US mentioned more frequently," said the survey.
"Robust end-demand fuelled expansions in output, new orders, and job creation," said Pranjul Bhandari, chief India economist at HSBC.
"To keep up with strong demand — particularly from international markets, as evidenced by the substantial rise in new export orders — Indian manufacturing firms had to tap deeper into their inventories, causing the stock of finished goods to continue shrinking. Finally, input prices moderated while average selling prices rose as some manufacturers passed on additional cost burdens to clients," she added.
Input price inflation retreated to a four-month low, despite rising iron and steel costs as the rate of increase was negligible relative to the series average. “Average selling prices rose markedly, however, as several firms sought to share additional cost burdens (freight, labour and materials) with their clients. In some instances, companies attributed upward revisions to demand buoyancy," said the survey.
Employment increased at a record pace, with most survey panellists recording short-term recruitment. "The outlook for the Indian manufacturing sector remained positive in June. That said, uncertainties surrounding competition, inflation and changes in consumer preferences weighed on sentiment," said the survey.
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