Key Points
- Commerce Minister Piyush Goyal met US Commerce Secretary Howard Lutnick in Washington to accelerate the first phase of the India-US bilateral trade agreement.
- Both sides aim to clinch an initial deal before July 9, when a 90-day pause on new US tariffs expires.
- India seeks tariff concessions for textiles, gems, leather, and agriculture; the US targets access for industrial goods, EVs, wines, and farm products.
- The agreement will address market access, rules of origin, and non-tariff barriers, with 19 chapters under negotiation.
- The US has been India’s largest trading partner for four consecutive years, with bilateral trade at $131.84 billion in 2024-25.
- India’s trade surplus with the US reached $41.18 billion in 2024-25, up from $35.32 billion the previous year.
New Delhi: Commerce and Industry Minister Piyush Goyal’s high-stakes visit to Washington this week marks a pivotal moment in India-US trade relations. Meeting with US Commerce Secretary Howard Lutnick, Goyal focused on expediting the first phase of the bilateral trade agreement, aiming to secure a deal before the US reimposes additional tariffs on Indian goods after July 9.
What’s at Stake in the Trade Talks?
The negotiations, which follow months of dialogue and a previous visit by Goyal in March, are set against the backdrop of a 90-day tariff pause announced by US President Donald Trump. This pause temporarily halts a planned 26% tariff hike on Indian imports, offering both countries a window to resolve key trade issues.
Key negotiation points include:
- Market Access: India is pushing for duty concessions on labor-intensive exports such as textiles, gems and jewellery, leather goods, garments, plastics, chemicals, shrimp, oil seeds, grapes, and bananas.
- US Demands: The US seeks lower tariffs on industrial goods (especially electric vehicles), wines, petrochemicals, dairy, and agricultural products like apples and tree nuts.
- Non-Tariff Barriers: Both sides are debating rules of origin and non-tariff barriers, with the US raising concerns about regulatory obstacles in India, and India seeking the removal of US non-tariff barriers on its exports.
- Comprehensive Agreement: The terms of reference for the trade deal cover 19 chapters, including goods, services, customs facilitation, and more.
Multi-Phase Approach and Timeline
India envisions the trade pact unfolding in three phases:
- Phase One: Focused on industrial goods, select agricultural products, and resolving specific non-tariff issues. Both sides hope to finalize this phase before the July tariff deadline.
- Phase Two: A broader agreement covering all 19 chapters, targeted for completion by fall 2025, possibly coinciding with a major US-India summit.
- Phase Three: Finalization and implementation, pending US Congressional approval, likely extending into 2026[2].
Trade Snapshot: US Solidifies Top Partner Status
The US has retained its position as India’s largest trading partner for the fourth straight year, with bilateral trade reaching $131.84 billion in 2024-25. India’s exports to the US surged 11.6% to $86.51 billion, while imports from the US grew 7.4% to $45.33 billion. This resulted in a record trade surplus for India of $41.18 billion.
Top Indian exports to the US: Pharmaceuticals, telecom equipment, gems and jewellery, petroleum products, and ready-made garments.
Major US exports to India: Crude oil, petroleum products, coal, diamonds, machinery, aircraft parts, and gold.
Challenges and Outlook
Despite rapid growth, the US has repeatedly flagged concerns over India’s non-tariff barriers and the widening trade deficit. While India is open to tariff reductions, it is unlikely to grant zero tariffs on politically sensitive sectors like agriculture and dairy. Both sides are keen to ensure that any agreement is reciprocal and mutually beneficial.
With both nations targeting $500 billion in bilateral trade by 2030, the outcome of these talks will shape the next decade of economic cooperation. Negotiators are racing against time to secure early wins and prevent a new round of tariffs that could disrupt booming trade ties.
India and the US are in the final stretch of talks for a phased trade agreement, balancing ambitious goals with sectoral sensitivities. The next few weeks will be decisive for both economies as they seek to deepen their partnership and avoid costly trade barriers.
