India and US Accelerate Trade Talks: What’s at Stake?
Intensifying Trade Negotiations
New Delhi: On Tuesday, Piyush Goyal, the Minister of Commerce and Industry, engaged in talks with US Commerce Secretary Howard Lutnick in Washington, aiming to accelerate the discussions surrounding the initial phase of the proposed bilateral trade agreement between India and the United States.
Goyal is currently in Washington for a ministerial meeting focused on assessing the progress of the trade negotiations.
In a post on X, Goyal expressed, “Productive discussions with Secretary @HowardLutnick to expedite the first tranche of the India-US Bilateral Trade Agreement.”
This is not Goyal's first visit to Washington for trade discussions; he was there in March as well.
Following the ministerial meeting, chief negotiators from both nations will continue their discussions until May 22.
These meetings are taking place as both countries consider an interim trade arrangement in goods to achieve 'early mutual wins' before finalizing the first phase of the trade agreement by the fall (September-October) of this year.
Key topics for negotiation include market access, rules of origin, and non-tariff barriers.
Officials from both New Delhi and Washington are looking to utilize the 90-day tariff pause to further the discussions. The US has temporarily suspended an additional 26 percent tariff on India until July 9, a move announced on April 2 to address the growing trade deficit.
However, the existing 10 percent baseline tariff will remain unchanged.
To enhance bilateral trade, India is advocating for duty concessions in labor-intensive sectors such as textiles, gems and jewelry, leather goods, garments, plastics, chemicals, shrimp, oilseeds, and fruits like grapes and bananas in the proposed agreement with the US.
Conversely, the US is seeking duty concessions in areas including specific industrial goods, automobiles (especially electric vehicles), wines, petrochemical products, dairy, and agricultural items like apples and tree nuts.
The terms of reference (ToRs) for the Bilateral Trade Agreement (BTA) have been established by both nations, encompassing approximately 19 chapters that address tariffs, goods, services, rules of origin, non-tariff barriers, and customs facilitation.
The US has repeatedly expressed concerns regarding certain non-tariff barriers affecting American products in the Indian market.
For the fourth consecutive year in 2024-25, the US has remained India's largest trading partner, with bilateral trade reaching USD 131.84 billion. The US constitutes about 18 percent of India's total goods exports, 6.22 percent of imports, and 10.73 percent of the country's overall merchandise trade.
India recorded a trade surplus of USD 41.18 billion in goods with the US in 2024-25, compared to USD 35.32 billion in 2023-24, USD 27.7 billion in 2022-23, USD 32.85 billion in 2021-22, and USD 22.73 billion in 2020-21. The US has raised concerns regarding this expanding trade deficit.