India-US Bilateral Trade Agreement Nears Completion: Set to Address 50% Tariffs and Boost Trade Relations

The bilateral trade agreement between India and the US is approaching its final stages of negotiation, with an announcement expected soon on a mutually agreed date.

According to a government official speaking on Monday, the first phase of the proposed India-US bilateral trade agreement (BTA) is 'nearing closure' and will specifically address the significant 50 percent tariffs imposed by the Trump administration on Indian goods while resolving America's market access concerns.

Currently, the US has implemented a dual tariff structure on Indian imports - a 25 percent reciprocal tariff plus an additional 25 percent penalty on goods entering American markets, largely in response to India's purchase of Russian crude oil.

"We are engaged with the US on the BTA, which consists of two components. One aspect of the negotiations will require more time, while the other is a package designed to address reciprocal tariffs. We're working simultaneously on both fronts. The package addressing reciprocal tariffs is essentially near completion, and we anticipate finalizing it shortly," the official stated.

The official emphasized that the deal is expected to resolve the 25 percent penalty imposed on India, noting that without addressing this issue, the agreement would lack substance.

This agreement represents the first of multiple packages or tranches within the broader BTA framework, specifically targeting the tariff concerns.

Regarding India's state-run oil companies signing a one-year agreement to import LPG from the US in 2026, the official clarified: "This arrangement has been in development for some time. It exists within the broader context of maintaining trade relations with the US. While not explicitly part of any negotiation package, it definitely represents our efforts to balance trade with the US." This move is widely interpreted as an attempt to reduce India's trade surplus with the US - a point of contention for President Donald Trump that prompted the 50 percent tariff on Indian goods.

The India-US bilateral trade agreement has progressed through six rounds of talks thus far. Both nations have expressed their intention to complete the first tranche by fall 2025.

A delegation of Indian officials led by Commerce Secretary Rajesh Agrawal visited Washington last month for trade discussions with their American counterparts, concluding three days of talks on October 17.

These negotiations hold particular importance as relations between the two countries have experienced significant strain since the Trump administration imposed the steep 50 percent tariff on Indian products, including the 25 percent additional duty related to Russian crude oil purchases.

The proposed agreement aims to more than double bilateral trade to USD 500 billion by 2030, up from the current USD 191 billion.

The US is seeking expanded market access for various products including almonds, pistachios, apples, ethanol, and genetically modified commodities.

For the fourth consecutive year in 2024-25, the US maintained its position as India's largest trading partner, with bilateral trade valued at USD 131.84 billion (including USD 86.5 billion in exports). The US accounts for approximately 18 percent of India's total goods exports, 6.22 percent of imports, and 10.73 percent of the country's overall merchandise trade.

According to commerce ministry data, India's merchandise exports to the US declined by 11.93 percent to USD 5.46 billion in September due to Washington's high tariffs, while imports increased by 11.78 percent to USD 3.98 billion during the same period.

President Trump recently indicated that the US is "pretty close" to achieving a "fair trade deal" with India and suggested he would reduce tariffs on Indian goods "at some point."

When asked about a US bill that would permit Trump to impose tariffs of up to 500 percent on imports from countries maintaining trade relationships with Russia, the secretary responded that globally, countries conduct trade with other nations based on bilateral relationships and economic requirements.

"We haven't deeply analyzed this matter. However, I should emphasize that throughout the world, countries engage in trade with others based on their bilateral relationships and economic necessities, and those trade patterns continue. Our trade decisions will remain guided by those principles," the secretary added.