India, US to negotiate bilateral trade deal to ease tariffs, trade barriers

New Delhi: India and the US are working towards a bilateral trade agreement aimed at expanding market access, lowering tariffs and non-tariff barriers, and improving supply chain integration, the government informed Parliament on Tuesday. In a written reply to the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada said the US has not imposed any reciprocal tariffs on India so far.

“Both countries plan to negotiate a mutually beneficial, multi-sector Bilateral Trade Agreement (BTA) focused on increasing market access, reducing tariff and non-tariff barriers, and enhancing supply chain integration,” Prasada said.

The US issued a memorandum on reciprocal trade and tariffs on February 13, directing the US Commerce Secretary and the United States Trade Representative (USTR) to investigate harm caused by non-reciprocal trade arrangements with trading partners and propose remedies for each case. Tariffs are import duties imposed by governments, paid by companies to bring foreign goods into the country.

During Prime Minister Narendra Modi’s visit to Washington last month, India and the US committed to more than doubling bilateral trade to $500 billion by 2030. Both sides also agreed to negotiate the first phase of the trade agreement by autumn 2025.

In 2023, India-US bilateral trade in goods and services stood at $190.08 billion — $123.89 billion in goods and $66.19 billion in services. India’s merchandise exports to the US totalled $83.77 billion, while imports were $40.12 billion, leaving a trade surplus of $43.65 billion in India's favour.

Between 2021 and 2024, the US was India’s largest trading partner. India maintains a trade surplus with the US, one of the few countries with which it enjoys such a position. Prasada said India continues to engage with the US to strengthen and expand trade ties in a mutually beneficial and fair manner.

“This is an ongoing process, and Indian exporters are working to diversify their trade baskets and export destinations,” he said.

Commerce Secretary Sunil Barthwal told a Parliamentary panel on Monday that trade negotiations with the US are ongoing and no agreement on tariffs has been reached yet. Barthwal addressed the Parliamentary Committee on External Affairs regarding recent claims by US President Donald Trump that India had agreed to significantly lower its tariffs. Meanwhile, Foreign Secretary Vikram Misri briefed the committee on trade relations with China and Europe.

In 2023-24, India exported engineering goods worth $17.62 billion to the US. Other major exports included electronics ($10 billion), gems and jewellery ($9.9 billion), petroleum products ($5.83 billion), textiles ($4.7 billion), and marine products ($2.5 billion).

In a separate statement, Prasada said India’s tariff policy aims to regulate trade, protect domestic industries, and generate revenue through taxes on imported and exported goods. “Recent reforms have focused on streamlining the tariff structure and facilitating trade,” he said.

India, a member of the World Trade Organization (WTO), is bound by its maximum allowable tariff for each product category. However, the actual tariffs applied are generally lower than the WTO-bound rates.

“With the evolving trade scenario, India is increasingly focusing on preferential and free trade agreements (PTAs/FTAs), which involve reducing or eliminating customs tariffs and non-tariff barriers on substantial trade volumes among member countries,” Prasada added.

India currently has 13 FTAs and 9 PTAs in place and is negotiating similar agreements with the EU, the UK, and Oman.