President Trump has recently hinted at a potentially "very big" trade deal with India, sparking considerable interest and speculation. This announcement follows the United States' recent trade agreement with China, positioning India as the next major focus in Washington's trade agenda. The statement was made at the White House during an event promoting the administration's tax and spending cuts. Trump conveyed optimism about ongoing trade discussions, suggesting that India is willing to "open up" its markets as part of the deal.

In response to growing anticipation, India's Commerce and Industry Minister Piyush Goyal confirmed that both nations are actively engaged in negotiations for a mutually beneficial bilateral trade pact. Goyal highlighted that Prime Minister Narendra Modi and President Trump had previously agreed to pursue a trade agreement that would benefit both economies, businesses, and citizens.

U.S. Commerce Secretary Howard Lutnick echoed this sentiment, expressing confidence that a deal with India is within reach. Speaking at the U.S.-India Strategic Partnership Forum, Lutnick noted substantial progress in negotiations and anticipated a deal in the near future, one that "really works for both countries."

These discussions reflect a notable shift from past trade relations, which were often strained by disagreements over issues such as digital services taxes and data localization rules. Both countries now appear to be actively seeking ways to harmonize their interests.

For India, a well-crafted trade agreement with the U.S. could significantly enhance access for its service sector, encourage increased foreign investment, and solidify economic ties with a crucial partner. The potential benefits for the U.S. include greater access to India's large and growing market, particularly in sectors like energy, agriculture, defense, and aviation. Lower tariffs could make U.S. products more competitive in India.

However, challenges remain. Key sticking points include market access for agricultural products and data privacy concerns. The U.S. is keen on exporting items like maize and soybeans to India, while India aims to protect its farmers. Similarly, India seeks data localization, requiring companies to store data locally, a measure that raises privacy concerns for the U.S.

The ongoing negotiations take place against the backdrop of a July 9 deadline, when a pause on reciprocal tariffs is set to expire. An Indian team, led by chief negotiator Rajesh Agarwal, recently arrived in Washington for further discussions, aiming to finalize an agreement before the deadline. The initial focus is on resolving current trade issues and securing an interim deal, potentially paving the way for a broader Bilateral Trade Agreement (BTA) by September or October 2025. The long-term goal is to double bilateral trade to $500 billion by 2030.

Despite existing disagreements, both nations appear committed to reaching a mutually beneficial agreement. Experts emphasize that a comprehensive BTA that addresses all outstanding issues will require time. Therefore, both countries may initially focus on addressing immediate concerns through an early harvest deal, which could then serve as a foundation for negotiating a comprehensive free trade agreement.