Urgent Talks Begin on India-US Trade Agreement
India and the United States are set to engage in sector-specific discussions aimed at finalizing the structure of a proposed bilateral trade agreement (BTA). This decision follows four days of negotiations between senior officials from both nations, concluding on Saturday. The urgency of these talks is underscored by the U.S. threat to impose reciprocal tariffs on key trading partners, including India, by April 2.
Upcoming Virtual Engagements
The Ministry of Commerce announced that expert-level discussions will commence virtually in the coming weeks, leading to an in-person negotiation round shortly thereafter. Both countries are committed to establishing a mutually beneficial, multi-sector BTA, with the goal of finalizing its first phase by fall 2025. The proposed agreement aims to enhance market access for goods, reduce tariff and non-tariff barriers, and improve supply chain integration between India and the U.S.
A U.S. delegation, led by Assistant U.S. Trade Representative for South and Central Asia Brendan Lynch, recently visited India to finalize the terms of the agreement. The two nations aim to more than double bilateral trade to USD 500 billion by 2030. Both sides have expressed a strong commitment to concluding the BTA in the coming months, aligning the agreement with shared goals of prosperity and mutual benefit.
Context of the Negotiations
These discussions build on Commerce and Industries Minister Piyush Goyal’s recent visit to Washington from March 4-6, where he met with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick. Video conferences have also been held to follow up on the ongoing talks. Notably, U.S. President Donald Trump praised Prime Minister Narendra Modi, calling him “a very smart man,” while emphasizing that tariff negotiations would “work out very well” between the two countries.
In typical trade agreements, countries often reduce or eliminate customs duties on most traded goods, ease trade norms for services, and encourage investments. The U.S. has requested duty concessions in various sectors, including industrial goods, automobiles, wines, and certain agricultural products. Meanwhile, India is likely to focus on duty reductions in labor-intensive sectors such as textiles, although it may avoid discussions on dairy and agriculture due to political sensitivities.
Concerns from Indian Exporters
Indian exporters and industry groups have voiced concerns regarding the potential impact of the U.S. reciprocal tariffs, as the U.S. is India’s largest trading partner. There are calls for India to seek exemptions from these tariffs to mitigate any adverse effects. In 2023-24, the U.S. accounted for a total bilateral trade of USD 119.71 billion with India, including USD 77.51 billion in exports and USD 42.19 billion in imports, resulting in a trade surplus of USD 35.31 billion.
India’s exports to the U.S. include pharmaceuticals, telecom instruments, precious stones, and ready-made garments. Conversely, India’s primary imports from the U.S. consist of crude oil, coal, aircraft, and machinery. The U.S. has also been a significant source of foreign direct investment (FDI) for India, with USD 67.8 billion in investments recorded from April 2000 to September 2024.
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