The initial phase of the proposed bilateral trade agreement (BTA) between India and the US is close to completion, aiming to address the significant 50% tariffs imposed by the previous US administration on Indian goods. Additionally, the agreement seeks to resolve market access issues for American products, as stated by a government official on Monday.
The US has enforced a 25% reciprocal tariff, along with another 25% tariff on Indian goods entering the American market for purchasing Russian crude oil.
According to the official, negotiations on the BTA consist of two parts, with one part requiring more time for discussions. However, progress has been made on a package that can tackle reciprocal tariffs, which is nearing finalization. The official emphasized the importance of resolving the 25% penalty on India to ensure the agreement’s effectiveness.
The BTA comprises multiple packages or tranches, with the first tranche focusing on addressing the tariffs. An official announcement of the deal is expected to be made on a mutually agreed-upon date by both countries.
Regarding India’s state-run oil companies signing a one-year deal to import cooking gas LPG from the US in 2026, the official mentioned that this initiative aims to balance trade with the US and is not directly tied to the ongoing negotiations. The move is perceived as an effort to reduce India’s trade surplus with the US, which has been a contentious issue, leading to the imposition of a 50% tariff on Indian imports by President Donald Trump.
Both India and the US have conducted six rounds of talks thus far, with plans to finalize the first tranche of the agreement by the fall of 2025. A delegation of Indian officials, led by Commerce Secretary Rajesh Agrawal, recently engaged in trade discussions with their US counterparts in Washington, concluding on October 17 after three days of talks.
The negotiations for the pact hold significant importance given the strained relations between the two countries following the imposition of hefty tariffs by the previous US administration. The proposed agreement aims to significantly increase bilateral trade to USD 500 billion by 2030 from the current USD 191 billion.
The US is pushing for expanded market access for its products, including almonds, pistachios, apples, ethanol, and genetically modified commodities. In 2024-25, the US remained India’s largest trading partner for the fourth consecutive year, with bilateral trade valued at USD 131.84 billion, comprising USD 86.5 billion in exports. This partnership represents approximately 18% of India’s total goods exports, 6.22% in imports, and 10.73% in the country’s total merchandise trade.
In September, India’s merchandise exports to the US declined by 11.93% to USD 5.46 billion due to the prevailing high tariffs, while imports rose by 11.78% to USD 3.98 billion during the same period, based on commerce ministry data.
President Trump recently expressed optimism about reaching a fair trade deal with India, indicating a potential reduction in tariffs on Indian goods in the near future.