India and the United States are gearing up for a significant round of negotiations aimed at establishing a comprehensive bilateral trade agreement. This ambitious pact seeks to boost market access, lower tariffs and non-tariff barriers, and enhance supply chain integration between the two nations — both of which are critical to global trade dynamics. Minister of State for Commerce and Industry Jitin Prasada, in a detailed written response to the Lok Sabha, confirmed that no reciprocal tariffs have been imposed on Indian exports by the US so far. He emphasized that both governments remain committed to fostering a balanced, mutually beneficial agreement that supports economic growth on both sides.
The US government recently issued a memorandum on February 13, instructing the Commerce Secretary and the United States Trade Representative (USTR) to evaluate the impact of non-reciprocal trade practices by trading partners and to propose effective remedies. This initiative forms part of a broader strategy to address perceived imbalances in international trade relations. Notably, India stands out as one of the few nations to maintain a trade surplus with the US — a trend that persisted in 2023, when India’s merchandise exports to the US reached $83.77 billion, compared to imports of $40.12 billion, resulting in a $43.65 billion surplus in India’s favor.
During Prime Minister Narendra Modi’s high-profile visit to Washington, both leaders reiterated their shared goal of more than doubling bilateral trade, targeting a robust $500 billion exchange by 2030. The anticipated bilateral trade agreement, which is expected to make significant progress by the fall of 2025, is seen as a key step in achieving this milestone. Prasada highlighted that India continues to engage in constructive dialogue with US officials to broaden the scope of trade ties and ensure an equitable and rewarding partnership. Indian exporters are working diligently to diversify both product categories and target markets, recognizing the need to stay competitive and adaptable in an evolving global economic landscape.
Commerce Secretary Sunil Barthwal, during a briefing to the Parliamentary Committee on External Affairs, clarified that while trade talks are progressing, no official agreement on tariff reductions has been finalized. This comes in the wake of US President Donald Trump’s renewed criticism of India’s tariff policies, which he described as “very unfair.” Trump also announced that, effective April 2, the US would impose reciprocal tariffs on nations maintaining high duties on American products. Minister Piyush Goyal, following his recent week-long trip to Washington, engaged in high-stakes negotiations with US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick. Goyal is expected to return to the US for further rounds of discussions aimed at resolving remaining disputes, particularly around market access and tariff structures.
India’s export portfolio to the US in 2023-24 included a wide range of high-value sectors such as engineering goods ($17.62 billion), electronics ($10 billion), gems and jewelry ($9.9 billion), petroleum products ($5.83 billion), textiles ($4.7 billion), and marine products ($2.5 billion). This diversified export base reflects India’s evolving manufacturing capabilities and competitive edge in global markets. The Commerce Ministry emphasized that India’s tariff strategy remains centered on regulating imports, protecting key domestic industries, and generating revenue, while simultaneously facilitating smoother trade flows. Recent policy reforms have focused on simplifying tariff structures, promoting ease of doing business, and encouraging foreign investment in strategic sectors.
As a member of the World Trade Organization (WTO), India adheres to its maximum bound tariff commitments but typically maintains applied tariffs well below these thresholds for various commodities. The government has increasingly leaned toward Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) to create a more competitive and export-friendly environment. Currently, India participates in 13 FTAs and 9 PTAs and is actively pursuing negotiations with major partners, including the European Union, the United Kingdom, and Oman. These efforts reflect a broader economic strategy to strengthen trade ties, diversify markets, and ensure India’s position as a global economic powerhouse.
Looking ahead, both countries remain optimistic about finalizing a well-rounded bilateral trade agreement that addresses key concerns, promotes investment, and unlocks new opportunities for businesses on both sides. The negotiations are expected to cover a wide spectrum of issues, including intellectual property rights, digital trade, services, agricultural exports, and market access for manufactured goods. With both governments determined to secure a balanced and forward-looking agreement, the India-US trade partnership is poised for significant growth, potentially shaping the future of global trade and economic cooperation for years to come.
