India-US Trade Agreement Announcement Enhances Business Confidence and Economic Ties

The recent decision to negotiate a bilateral trade agreement between India and the US has increased business optimism in both nations. Commerce and Industry Minister Piyush Goyal stated that this move could enhance economic relations by capitalising on their competitive advantages. The announcement followed Prime Minister Narendra Modi's visit to Washington, where both countries committed to more than double their trade to USD 500 billion by 2030.

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During the visit, it was agreed to initiate discussions on a multi-sector bilateral trade agreement by autumn 2025. Goyal expressed that this development instills confidence among businesses in both countries, believing they can significantly impact global trade. He emphasised the potential for India and the US to collaborate as partners for progress and prosperity.

India's Expanding Trade Partnerships

India is actively expanding its global partnerships through new trade agreements with developed nations, including Australia, the UAE, and the European Free Trade Association (EFTA) bloc. The EFTA comprises Iceland, Liechtenstein, Norway, and Switzerland. The India-EFTA free trade agreement was signed on March 10 last year and is expected to be implemented later this year.

Goyal highlighted India's growing significance on the world stage at the ET Now Global Business Summit. He noted the progress in engagements with Europe and anticipated advancements with the US as they work towards finalising a trade deal by autumn this year.

Trade Talks with the UK

India and the UK are set to resume discussions for a proposed free trade agreement from February 24. These talks initially began in January 2022 but stalled due to both nations entering their general election cycles. Additionally, European Commissioner for Trade and Economic Security Maros Sefcovic is scheduled to visit India on February 28.

In 2023, bilateral trade between the US and India in goods and services reached USD 190.08 billion, comprising USD 123.89 billion in goods and USD 66.19 billion in services. India's merchandise exports to the US amounted to USD 83.77 billion, while imports were USD 40.12 billion, resulting in a trade surplus of USD 43.65 billion for India.

Boosting Domestic Manufacturing

The Indian government is implementing measures to enhance domestic manufacturing capabilities. Goyal mentioned that the "Make in India" initiative will be driven by a National Manufacturing Mission. This mission aims to introduce innovative solutions and address challenges faced by manufacturers, particularly small and medium enterprises (SMEs), ensuring competitiveness in Indian manufacturing.

In terms of services trade with America, India's exports were valued at USD 36.33 billion in 2023, while imports totaled USD 29.86 billion. This resulted in a services trade surplus of USD 6.47 billion for New Delhi.

Previously, during Donald Trump's presidency, India and the US discussed a mini-trade deal which was later shelved by Joe Biden's administration due to their lack of interest in such agreements.