New Delhi, March 25 – India and the United States will commence three-day negotiations on a proposed bilateral trade agreement on Wednesday, as both sides seek to navigate growing trade tensions and looming reciprocal tariffs from the Trump administration, an official confirmed.
The discussions will be led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia, who, along with a delegation, will meet Rajesh Agrawal, Additional Secretary in India’s Department of Commerce. The agenda includes finalizing the negotiation framework, setting timelines, and defining the scope of the agreement.
Phased Approach to Trade Deal
The trade pact will be negotiated in two phases, with the first phase primarily focusing on goods trade. India and the US aim to finalize this initial segment by fall 2025 (September-October).
In such trade agreements, countries typically reduce or eliminate import duties on a majority (90-95%) of traded goods. The agreement is also expected to simplify service trade regulations and enhance investment flows. India has previously signed similar agreements with the UAE, Australia, and the European Free Trade Association (EFTA).
The US has pushed for greater market access in areas like industrial goods, automobiles, wines, and agriculture, while India is expected to seek duty concessions on labour-intensive exports, such as textiles.
Tariff Tensions Loom Over Talks
The timing of the negotiations coincides with President Donald Trump’s plan to impose reciprocal tariffs on key trading partners, including India, starting April 2. Trump has repeatedly criticized India’s high import tariffs on American goods, and uncertainties remain over how the new US duties will be implemented.
Growing Bilateral Trade & Investment
India and the US have committed to more than doubling their trade to $500 billion by 2030. In 2023, bilateral trade in goods and services reached $190.08 billion, with $123.89 billion in goods trade and $66.19 billion in services trade.
During 2023-24, the US was India’s largest trading partner, with total bilateral goods trade of $119.71 billion. India recorded a trade surplus of $35.31 billion, exporting $77.51 billion worth of goods to the US while importing $42.19 billion.
The US has been a significant foreign investor in India, with $67.8 billion in foreign direct investment (FDI) between April 2000 and September 2024.
Key Trade Sectors & Challenges
India faces steep US tariffs on several labour-intensive products, including textiles, garments, and footwear, with duties ranging from 15-35%. Additionally, 25% tariffs on steel and aluminum have already been enforced by the US.
India’s Key Exports to the US (2024):
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Pharmaceuticals & Biologicals – $8.1 billion
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Telecom Instruments – $6.5 billion
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Precious & Semi-Precious Stones – $5.3 billion
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Petroleum Products – $4.1 billion
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Jewelry – $3.2 billion
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Cotton Garments – $2.8 billion
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Iron & Steel Products – $2.7 billion
India’s Key Imports from the US (2024):
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Crude Oil – $4.5 billion
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Petroleum Products – $3.6 billion
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Coal & Coke – $3.4 billion
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Cut & Polished Diamonds – $2.6 billion
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Electric Machinery – $1.4 billion
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Aircraft & Spacecraft Components – $1.3 billion
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Gold – $1.3 billion
What’s Next?
Commerce Minister Piyush Goyal recently held discussions with US Trade Representative Jamieson Greer and US Commerce Secretary Howard Lutnick in Washington. The two sides now look to navigate complex trade challenges and finalize the first tranche of the trade pact by late 2025.
With rising US tariffs, shifting trade policies, and a fast-approaching election year, the outcome of these negotiations could significantly shape the future of India-US trade relations.
