Cracking the deal, India and the United States have successfully finalized the terms of reference for the initial phase of a bilateral trade agreement, according to an Indian trade official. The two nations had previously agreed in the month of February to collaborate on the first stage of the trade pact. This would be aimed at finalizing it by the end of this year, wherein, the broader goal would be to boost bilateral trade to $500 billion by 2030.
Particularly the imposition of 26 per cent reciprocal tariffs on Indian goods by the US earlier this month, the move comes amid recent trade tensions between the two countries. While, having said that, US President Donald Trump has also announced a 90-day pause on tariff hikes for major trading nations which include India as well.
Also to note, India has responded by overhauling its tariff regime in recent weeks; thereby reducing import duties on around 8,500 industrial items. This includes prominent American products such as bourbon whiskey and Harley-Davidson motorcycles.
Phase One Deal Snippets
The bilateral trade agreement is an integral part of “Mission 500.” And speaking of the mission, it is an ambitious initiative to more than double current trade volumes; thereby positioning India as a key partner in global supply chains. This looks promising especially as US companies seek to diversify away from China.
Furthermore, the deal is expected to cover a wide range of sectors which will include energy, critical minerals, technology, and manufacturing among others. Under its Production-Linked Incentive (PLI) schemes, India is open to considering zero-duty imports from the US in select industries.
Imperativeness of India–US Trade Reset
On April 2, which is dubbed “Liberation Day”, President Trump announced reciprocal tariffs. This was a historical move where some stating it to be a foolish act. This marked a significant shift towards greater US trade protectionism. Citing long-standing trade imbalances and the need to safeguard US domestic industry, he signed an executive order mandating a 10 per cent base tariff on all imports starting April 5. Additionally, steeper duties were imposed on countries with large trade surpluses while the 10 percent tariff applied broadly with the US — China being the primary target.
India Reduces Import Duties Amid US-China Tariff War
This move escalated the US–China trade conflict. Tariffs on Chinese goods were raised to 54 per cent and then surged to 145 per cent. In response, China raised tariffs on US products to 125 per cent and imposed additional export restrictions, particularly on key rare earths. Meanwhile, India has taken steps to ease friction, slashing duties on thousands of items and signalling openness to trade cooperation with Washington.
