India and the United States have agreed to move forward with a Bilateral Trade Agreement (BTA), aiming to finalise its first phase by the autumn of 2025.
However, discussions in New Delhi this week did not result in any immediate tariff exemptions for India, despite ongoing trade tensions between the two nations.
The timing of the talks was significant, taking place just days before new US tariffs come into effect on April 2. These tariffs, introduced as part of US President Donald Trump’s reciprocal trade policy, include import levies targeting India.
With India's trade surplus and protectionist policies under scrutiny, there are concerns that it could face further retaliatory measures from Washington.
In a statement issued late Saturday, India’s Commerce Ministry said that both sides had reached a broad understanding on the next steps towards a multi-sector BTA. The negotiations focused on increasing market access, reducing tariff and non-tariff barriers, and strengthening supply chain integration.
However, there was no indication that immediate action would be taken to ease trade restrictions before the new US tariffs come into force.
The credit rating agency India Ratings and Research has warned that the upcoming tariffs could result in India’s exports to the US declining by as much as $7.3 billion in the next fiscal year.
Despite this, the Indian government has attempted to reduce trade tensions in recent months by lowering tariffs on select products, including high-end motorcycles and bourbon whiskey.
Before the trade discussions, there were reports that India might offer to scrap a levy on online services, including digital advertising.
Additionally, there were indications that New Delhi was considering lowering tariffs on cars, electronics, and medical equipment. However, no formal agreement was reached on these matters.
According to media reports, there was significant convergence between both sides regarding the structure of a trade deal. However, the terms of reference, which would define the exact scope of the agreement, remain unsettled.
Another pressing concern for India is the US decision to impose a 25% tariff on nations that purchase oil from Venezuela. India, which has been a significant buyer of Venezuelan crude, is expected to face economic consequences as a result of this policy shift.
President Trump has previously criticised India for having some of the highest tariffs in the world. Despite his tough stance, he recently suggested that trade relations with India would "work out very well," though he did not provide any further details.
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