While the final contours of the agreement are still being negotiated, Keshap stressed that the ideal long-term vision should aim for zero tariffs and minimal non-tariff barriers.
“Zero tariffs are the best for ensuring the greatest amount of prosperity, happiness, and consumer choice,” he said, adding that reducing bureaucracy and red tape is just as important as lowering tariffs.Both leaders underlined the importance of predictability for large-scale investment decisions.
“Executives want to know that if they’re going to invest $5 billion in a semiconductor plant or $8 billion in a critical minerals capability, they have a predictable, stable, transparent, and clear regulatory, tax, and tariff regime,” said Keshap. He noted that even a baseline tariff could be acceptable if it remained stable and consistent.
The biggest hurdle remains India’s longstanding sensitivities around agriculture and dairy. Aghi said these were red lines for New Delhi, due to both religious and regulatory reasons, including the use of animal feed and GMOs in US farming.
“You have to understand that when 60% of the population is working on farms, you have to protect them,” he said.
Given these differences, both sides are aiming to close an interim deal first, and take up contentious issues in a second phase. “Part one is about closing the deal, getting business moving, and bringing in more certainty,” Aghi said.
According to him, over 6,000 product lines have been agreed for inclusion in the early harvest agreement. As part of efforts to reduce the trade imbalance, India currently has a $40 billion trade surplus with the US. India is expected to increase LNG imports. This also addresses one of President Trump’s key concerns on energy trade.
On tariffs, Aghi clarified that reciprocity will be key. “If the US imposes 10%, India should also impose 10%. You can’t have one country at zero and the other at 10%,” he said, pointing to the need for balance, given the disparity in economic size and per capita incomes.
The comments come amid heightened anticipation that the US and India may sign a mini trade deal as early as next week. President Trump has already announced that his administration will start issuing ‘tariff letters’ to over 170 countries, with tariffs ranging from 10% to 70% taking effect from August 1.
Watch the accompanying video for the entire conversation
