India-US Free Trade 'Mini Deal' Likely By October: Sources

India is close to finalising an interim free trade agreement with the United States, sources told NDTV Monday evening, and said an announcement is expected by September or October.

Indian negotiators returned from the US Saturday after a fifth round of talks.

A team of American officials is expected in India in mid-August as both sides race to secure a provisional deal before President Donald Trump's August 1 deadline for imposition of fresh tariffs.

That 'hard deadline' was underlined by the US' Commerce Secretary, Howard Lutnick last week; in a televised interview he said, "... nothing stops countries from talking to us after August 1... but that's a hard deadline. They're going to start paying the tariffs from August 1."

Sources told NDTV a 'mini deal' might be worked out in time to avoid heavy tariffs on steel, automotive parts, and aluminium, which are among India's biggest exports to the US.

However, sources said that even if a 'mini deal' is not possible and the Trump administration imposes the 26 per cent tariff announced on April 2, the impact on India will not be significant.

Apart from the tariff on steel, issues related to agriculture and automobiles have also been discussed. And India, sources said, has hardened its position on the US' demand for duty concessions in the dairy sector. India has not given any FTA partner such concessions.

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India has also sought removal of the additional tariff of 26 per cent, as well as the base tariffs of 50 per cent on its steel and aluminium exports and the 25 per cent on the automotive sector.

Concessions have also been sought for labour-intensive sectors like textiles.

The US, meanwhile, wants relief on the import of certain industrial goods and automobiles, especially electric vehicles, as well as wines and petrochemical and agricultural products.

Perhaps most significantly, sources said India has told the US it reserves the right, under World Trade Organisation norms, to impose retaliatory duties on American imports.

India has not so far charged additional tariffs on US goods, unlike China and the European Union, which have also been hit with high tariffs as part of Trump's new administration.

Last month Trump - after the US announced an agreement with Indonesia, which saw tariffs on that country reduced to 19 per cent - declared a trade deal with India is a matter of time.

"We're going to have access to India... you have to understand, we had no access to any of these countries. Our people couldn't go in. We're getting access now because of the tariffs."

Sources also dismissed media speculation the US had set India certain conditions. Officials told NDTV India's economic and business interests would be 'fully protected' at all times.

India's merchandise exports to the US rose 22.8 per cent to $US 25.51 billion in the April-June quarter this fiscal year, while imports rose 11.68 per cent to $US 12.86 billion.

Meanwhile, India's free trade deal with the United Kingdom is expected to be approved during Prime Minister Narendra Modi's visit to that country this week. Mr Modi, accompanied by Commerce Minister Piyush Goyal, will likely sign the agreement on his July 23-24 trip.

The India-UK agreement includes duty cuts on nearly 99 per cent of products; i.e., 99 per cent of Indian exports will be duty free in the UK and 90 per cent of UK's imports will be exempted.