’Very good progress on talks’: India-US sign terms of reference for trade deal to include tariff barriers

India has decided to pursue a path of trade liberalisation with the United States, India's trade secretary said on Tuesday, with the two countries signing the terms of reference for the first part of a bilateral trade deal.

In February, India and the US agreed to work on the first phase of a trade deal to be concluded in 2025. The goal is to reach bilateral trade worth $500 billion by 2030. "India has decided to go for a path of trade liberalisation with the US," trade secretary Sunil Barthwal told reporters on Tuesday, April 15.

Barthwal also said there is ‘very good progress’ on trade talks with the US. "So, I expect that a lot of opportunities will come, and there will be a higher trade with the US if the trade deal materialises," said Barthwal. He said India is considering non-tariff and tariff barriers in the agreement. If both sides reduce these barriers, it will lead to higher trade growth for the US and India.

India-US trade talks

India and the US will start virtual discussions this month, with the next round of in-person talks scheduled for mid-May, added Rajesh Agrawal, additional secretary in the trade ministry. The two countries had agreed in February to begin work on the first stage of the deal, to finalise it by the end of 2025 as part of a broader goal to boost bilateral trade to $500 billion by 2030.

Negotiations of the various groups for the pact will start virtually. "We hope to get into the physical mode of negotiations, which may be in the second half of May. So we are on schedule regarding the bilateral trade agreement (BTA) and its negotiations," said Agrawal. He is the chief negotiator of India for this pact.

Speaking on the agreement, Sunil Barthwal said if finalised, the agreement will open huge opportunities for Indian and US businesses. "..There are concerns and opportunities for India regarding the current tariffs (globally). India has taken a path to trade liberalisation with the US. There is a clear pathway we have decided on at the leaders' level, and then meetings are held.

"Negotiations are going on, and we have taken a path of trade liberalisation and BTA. So if we follow that path, I think India's trade with the US will grow...that will also open up opportunities for India and the US, he said.

Barthwal added that countries will gain from BTA, which is the assumption based on which such trade agreements are finalised and negotiated. If both sides reduce these barriers, it will lead to higher trade growth for the US and India.

India-US trade activities so far

In a trade pact, two countries either significantly reduce or eliminate customs duties on the maximum number of goods traded between them. They ease norms to promote trade in services and boost investments. From 2021-22 to 2023-24, the US was India's largest trading partner. The US accounts for 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.