India and US Set to Engage in Sector-Specific Talks for Trade Pact in Coming Weeks

India and the United States are set to engage in sector-specific discussions soon to finalise the framework for a proposed bilateral trade agreement (BTA). This decision follows recent talks between senior officials from both nations. The discussions aim to address the US's threat of imposing reciprocal tariffs on key trading partners, including India, starting April 2.

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The commerce ministry highlighted that these talks aim to promote growth that ensures fairness, national security, and job creation. Both countries have broadly agreed on the next steps towards a mutually beneficial BTA. The goal is to finalise the first tranche by August-September 2025.

Trade Agreement Goals and Market Access

The proposed agreement seeks to enhance market access for goods, reduce tariff and non-tariff barriers, and deepen supply chain integration. Both sides are committed to aligning the BTA with shared goals of prosperity, resilience, and mutual benefit. The aim is to more than double bilateral trade to USD 500 billion by 2030.

A team led by Brendan Lynch, Assistant US Trade Representative for South and Central Asia, visited India to finalise the pact's contours. This visit followed Commerce Minister Piyush Goyal's trip to Washington from March 4-6, where he met US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.

US Demands and Indian Concerns

The US has requested duty concessions in sectors like industrial goods, automobiles, wines, petrochemical products, dairy, and agriculture items such as apples and tree nuts. Meanwhile, India may seek duty reductions for labour-intensive sectors like textiles. Indian exporters have urged the government to protect them from reciprocal tariffs imposed by the US.

Experts suggest that India might exclude dairy and agriculture from negotiations due to their political sensitivity. In 2024, US agricultural exports to India were valued at USD 1.6 billion, with key exports including almonds (USD 868 million) and pistachios (USD 121 million).

Recent Developments in Trade Relations

In June 2023, India removed retaliatory import duties on eight US products like chickpeas and lentils. These duties were initially imposed in response to increased tariffs on certain steel and aluminium products by the US in 2019.

In 2024, India's main exports to the US included drug formulations (USD 8.1 billion), telecom instruments (USD 6.5 billion), precious stones (USD 5.3 billion), petroleum products (USD 4.1 billion), gold jewellery (USD 3.2 billion), cotton garments (USD 2.8 billion), and iron products (USD 2.7 billion).

Bilateral Trade Figures

The US was India's largest trading partner in 2023-24, with bilateral trade reaching USD 119.71 billion. This included USD 77.51 billion in exports and USD 42.19 billion in imports, resulting in a USD 35.31 billion trade surplus for India.

Imports from the US included crude oil (USD 4.5 billion), petroleum products (USD 3.6 billion), coal (USD 3.4 billion), diamonds (USD 2.6 billion), electric machinery (USD 1.4 billion), aircraft parts (USD 1.3 billion), and gold (USD 1.3 billion).

From April 2000 to September 2024, India received USD 67.8 billion in foreign direct investments from the United States.

US President Donald Trump praised Prime Minister Narendra Modi as "a very smart man" while expressing optimism about resolving tariff issues between the two countries. Trump's remarks are significant given his criticism of high tariffs charged by India on American goods.