Industry insiders said any trade agreement at this point will be welcomed in both Washington and New Delhi.

India and the United States are expected to announce the resolution of some of their trade differences on medical equipment caps, ICT (Information Communication Technology) tariffs, market access for agricultural products, and are in discussions on restoring India's GSP (Generalized System of Preferences) status and a future Free Trade Agreement (FTA).

Despite the positive momentum in talks, sources said no “comprehensive trade deal” was expected during Prime Minister Narendra Modi's visit beginning Sunday and only a limited package of announcements are likely to be made.

Sources aware of the negotiations said that on Wednesday, Indian officials handed over their version of an agreement and it was being vetted by the USTR (United States Trade Representative). They hoped that Mr. Modi and President Donald Trump would make an announcement of a “mini-deal’ after their bilateral meeting in New York next week. The sources wouldn’t confirm, but didn’t rule out the possibility that the leaders would reference the “mini-deal” during their joint public appearance at the ‘Howdy, Modi’ event in Houston on Sunday, if it is finalised in time for that.

The draft agreement addresses some of the US’s concerns on ICT tariffs and data localisation rules, on price caps or Trade Margin Rationalisation (TMR) on medical equipment like knee implants, as well as agricultural market access for select products. In return the US is expected to roll back some of the tariffs that it had imposed on India in 2018,when it began its GSP review. However, the sources cautioned that India is still holding back on lifting the price caps on coronary stents, which were announced by the Modi government in 2017 as a move to make healthcare affordable, and shying away from major ICT concessions due to worries over opening the market for Chinese products.

It is unclear whether the two sides have made headway on the US demand for market access to dairy and pork products.

Business chamber officials who had keenly followed the talks since trade negotiations broke down between both sides last year say that an announcement on starting formal discussions on a FTA would be significant. “For many years, there has been a search for the next ‘big deal’ [like the civil nuclear deal] in the US-India relationship. The FTA talks, if they were to start, could potentially become that,” Ridhika Batra, Director, FICCI-USA said here.

According to the sources, the USTR and Commerce Ministry officials have also been discussing how to restore India’s GSP status in “some form or entirely”. Despite the government announcing that it was not deeply affected by the US decision to review and then revoke the GSP, the latest export figures have shown a slump, indicating that Indian exporters have lost out on contracts due to the US decision, and the government has been talking to the US about reconsidering its decision. Several US companies doing business in India and at least 44 lawmakers have made a case for India with Mr. Lighthizer on the GSP issue as well.

Industry insiders said any trade agreement at this point will be welcomed in both Washington and New Delhi. “For the Trump administration, which has not made much headway in its other trade tussles, including with China, the deal with India is a much needed break. For the Modi government, which has faced so much bad economic news, this will be a boost that will hopefully reopen channels of investment,” a business representative closely involved in the talks, who preferred not to be named, told The Hindu.

(with inputs from Sriram Lakshman)