Negotiations for a proposed trade agreement between India and the United States are reportedly progressing rapidly. Commerce and Industry Minister Piyush Goyal stated that the talks are proceeding with "a very fast pace and in the spirit of mutual cooperation". An Indian delegation has already arrived in Washington D.C. for the next round of discussions regarding the initial phase of the bilateral trade agreement (BTA). These discussions are expected to continue for a week. The goal is to finalize the first phase of the agreement by the fall of 2025.
The trade discussions aim to resolve disagreements in key sectors, notably agriculture and automobiles, striving for a mutually beneficial arrangement. India is hoping to secure duty concessions in labor-intensive sectors like leather, footwear, and textiles. In return, India may consider reducing levies on automobiles and American whiskey. The U.S. is seeking access to India's agriculture and dairy markets and lower tariffs on industrial goods, electric vehicles, petrochemicals, and wines.
These discussions occur amidst an interesting dynamic, with both countries publicly committing to deal-making in Washington while simultaneously engaging in procedural and legal battles at the World Trade Organization (WTO) in Geneva. Despite intensive rounds of discussions, contentious issues, especially regarding U.S. access to India's agriculture and dairy sectors, remain unresolved. India has maintained a firm stance, signaling that it will not negotiate a deal under the pressure of a deadline.
The U.S. administration under President Trump has extended the deadline for implementing additional tariffs on various nations, including India, until August 1, providing extra time for negotiations. According to reports, the U.S. is considering a tariff rate below 20%, signaling progress towards a mutually beneficial agreement, with both nations targeting $500 billion in bilateral trade by 2030.
India is also negotiating free trade agreements with the European Union (EU) and the UK. Commerce Secretary Sunil Barthwal highlighted that modern trade agreements differ from traditional pacts by incorporating services, regulatory frameworks, foreign direct investment, intellectual property rights, and digital trade principles. These comprehensive agreements include mechanisms for dispute resolution and regulatory harmonization, which officials say will facilitate global capability centers in India and provide regulatory certainty for businesses once implemented. India and the EU are aiming to conclude a free trade deal by the end of this year.
India has committed to increasing its purchases of American goods, including energy products like liquefied natural gas, crude oil, coal, and defense equipment. Data indicates that India's exports to the U.S. rose by 28% to $37.7 billion in the first four months of 2025, while imports climbed to $14.4 billion, thereby widening India's trade surplus. In FY2025, trade between India and the U.S. reached $186 billion. India exported $86.5 billion in goods to the U.S. while importing $45.3 billion, creating a goods trade surplus of $41 billion. In services, India exported an estimated $28.7 billion and imported $25.5 billion, adding a $3.2 billion surplus.