India-US Trade Deal Nearing Closure; First Tranche to Address Tariff Issues: Official Update

India-US trade negotiations near first-phase closure, with a major focus on easing high tariffs and expanding market access.

The long-awaited India–US Bilateral Trade Agreement (BTA) is reportedly “nearing closure” in its first phase, with the upcoming package set to address major tariff challenges imposed by the Trump administration. According to a senior government official, the agreement will resolve the steep duties that have strained economic ties between the two nations in recent years.

Key Focus: Tariff Rollbacks and Market Access

The US currently imposes a 50% tariff on several Indian goods, including a 25% reciprocal tariff linked to India's purchase of Russian crude oil. Officials confirmed that the first tranche of the BTA aims to tackle these reciprocal tariffs directly.

“The package that can address reciprocal tariffs is more or less near closure, and we should get it soon,”— Senior Government Official

The official emphasized that addressing the 25% penalty tariff is essential; otherwise, the agreement would “have no meaning.”

Multiple Tranches Planned Under the BTA

The BTA framework consists of several packages:

• First tranche: To address reciprocal tariffs and penalties

• Later phases: Expected to take more time and cover deeper market access issues

The final announcement will be made on a mutually agreed date between the two governments.

Energy Trade Move Not Part of Deal, But Helps Balance Trade

Responding to queries on India's recent one-year LPG import deal with the US for 2026, the official clarified that the agreement is not formally part of BTA negotiations. However, it supports India’s broader goal of balancing trade with the United States, especially given Washington’s concerns over India’s trade surplus.

Background: Tariffs Straining Bilateral Trade

Trade relations have been tense since the Trump administration levied a 50% tariff on Indian exports, including an additional 25% duty tied to India’s Russian oil purchases. Negotiations so far have included six rounds of talks, with both sides aiming to finalize the first component of the pact by Fall 2025.

An Indian delegation, led by Commerce Secretary Rajesh Agrawal, visited Washington for three-day talks concluding on October 17.

Target: USD 500 Billion in Trade by 2030

The proposed BTA aims to significantly expand trade volumes:

• Current bilateral trade: USD 191 billion

• Target by 2030: Over USD 500 billion

The US is pushing for greater access to Indian markets for items such as:

• Almonds

• Pistachios

• Apples

• Ethanol

• Genetically modified (GM) crops

US Remains India’s Top Trading Partner

For the fourth consecutive year (2024–25), the United States has been India’s largest trading partner:

• Total trade: USD 131.84 billion

• Exports to US: USD 86.5 billion

• Share in India’s total trade: 10.73%

However, India’s exports to the US dipped 11.93% in September, largely due to high US tariffs, while imports rose 11.78%.

Trump Signals Ease of Tariffs Soon

Former US President Donald Trump recently remarked that the US is “pretty close” to a fair trade deal with India, hinting that tariffs could be lowered “at some point.”

However, concerns remain over a proposed US bill allowing tariffs of up to 500% on imports from nations trading with Russia. Indian officials stated they are monitoring the situation but reiterated that India’s trade decisions will remain guided by national economic interests.