India and the United States are preparing to make a significant move in their bilateral trade relations within the next six to eight months, according to Commerce and Industry Minister Piyush Goyal.
In a statement made on February 18, Goyal hinted that the two nations are set to negotiate a “strong” trade agreement aimed at boosting their economic ties.
The announcement comes on the back of Prime Minister Narendra Modi’s recent visit to Washington, where India and the US outlined an ambitious plan to more than double their bilateral trade by 2030.
The two countries have agreed to begin negotiations on the initial phase of a multi-sector bilateral trade agreement (BTA) by the fall of 2025, marking a new chapter in their growing economic partnership.
Minister Goyal expressed optimism about the upcoming trade deal, stating that discussions would begin once his US counterpart assumes office.
He emphasised the eagerness of businesses in both countries, who are excited about the potential benefits of the agreement.
However, Goyal remained cautious when asked whether the pact would include provisions on goods, services, and investments, saying that confirmation was still awaited from the US side.
“We will engage in discussions to determine the path ahead once we receive confirmation,” Goyal added, indicating that detailed talks on the specifics of the agreement would follow.
The announcement has sparked significant interest, with many speculating about the potential scope of the deal and its implications for both countries' economies. The move comes as both India and the US seek to deepen their economic relationship.
A free trade agreement typically includes the elimination or reduction of customs duties on goods exchanged between the countries, as well as efforts to simplify regulations for services and encourage investment flows.
Both nations have expressed their intent to expand these areas, building on their already substantial trade ties.
In the past, the two countries had explored the possibility of a smaller, “mini” trade deal during the first term of former US President Donald Trump.
However, the Biden administration chose to abandon that idea in favour of a broader agreement, reflecting the changing dynamics of global trade and geopolitics.
In 2023, bilateral trade in goods and services between the US and India totalled $190.08 billion. This figure included $123.89 billion in goods and $66.19 billion in services.
Notably, India enjoyed a trade surplus with the US, with merchandise exports to the US reaching $83.77 billion, compared to imports of $40.12 billion.
This resulted in a trade surplus of $43.65 billion for India. Indian services exports to the US were valued at $36.33 billion, while imports totalled $29.86 billion, yielding a surplus of $6.47 billion for New Delhi.
The strong trade ties between the two nations have positioned the US as India’s largest trading partner from 2021 to 2024.
The US remains one of the few countries with which India maintains a trade surplus, which has been a consistent feature of their bilateral trade.
During the 2023-24 period, US-India bilateral trade in goods reached $119.71 billion, with India exporting $77.51 billion worth of goods to the US and importing $42.19 billion. This resulted in a trade surplus of $35.31 billion for India.
In addition to the growing trade relationship, the US has been a significant source of foreign direct investment (FDI) for India.
Between April 2000 and September 2024, India attracted $67.8 billion in FDI from the US, further strengthening economic ties between the two nations.
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