NEW DELHI: Trade negotiations between India and the United States have gained renewed momentum, with US President Donald Trump hinting at a forthcoming “very big” agreement aimed at opening up key sectors of the Indian market.
Speaking at a White House press conference, Trump said, “We just signed with China yesterday. We’re having some great deals. One is coming up—maybe with India. A very big one. We’re going to open up India. Just like we’ve started opening up China.” He added that while the US would impose high tariffs on some countries, it preferred forging mutually beneficial trade agreements where possible.
Key Sectors in Focus: Energy, Agriculture, and Tariffs
The proposed bilateral trade agreement (BTA) is expected to be broad in scope, potentially reshaping tariff structures and increasing access for American goods in the Indian market—particularly in energy, agriculture, defence, and aviation.
According to the Finance Ministry’s Monthly Economic Review, India’s relatively high tariff rates present an opportunity for the US to gain market access. The United States, which imposed a 26% reciprocal tariff on select Indian goods in April 2025, suspended the hike for 90 days starting April 10, maintaining a 10% base duty as talks resumed.
Bilateral discussions have accelerated in recent weeks, with negotiators reportedly making significant headway on digital trade norms, customs processes, technical standards, and market access. A provisional deal could be finalized ahead of July 9, with India pushing for full exemption from retaliatory tariffs.
In FY25, India-US bilateral trade reached $131.84 billion, making India the US’s largest trading partner. However, analysts caution that while US exports to India may rise under the deal, Indian exports are unlikely to see a proportionate benefit, as many already enjoy duty-free access in the US.
Energy Trade: LNG Could Lead the Way
India’s growing energy needs—especially in liquefied natural gas (LNG)—may create a strong avenue for cooperation. Ratings agency CRISIL highlights LNG’s potential advantages over crude oil, citing its price stability and compatibility with long-term supply contracts. The US, already a key energy exporter, could find a steady market in India as part of the agreement.
Agricultural Imports a Flashpoint
Agriculture remains one of the more sensitive areas of negotiation. While imports of specific US products such as walnuts, pistachios, and cranberries may increase, India remains cautious about granting broader access to its agricultural market. Despite this, the deal may allow for incremental openings without compromising domestic farm interests.
Defence and Technology: Expanding Strategic Ties
The defence sector also figures prominently in the talks. Even as India advances its indigenous defence production under its ‘Atmanirbhar Bharat’ initiative, it continues to import high-end systems. The US—currently the world’s top arms exporter—has deepened its defence engagement with India in recent years through initiatives like INDUS-X, launched in 2023 to enhance technological cooperation and joint production.
Opportunities and Risks for Indian Trade
While the agreement could pressure India’s current trade surplus with the US, CRISIL sees growth potential in select Indian sectors. Labour-intensive industries like textiles, gems, and jewellery may benefit from improved US market access. So could high-value industries such as pharmaceuticals and electronics, including smartphone manufacturing.
However, the net benefits for Indian exports may be modest unless new concessions are secured in value-added sectors or areas like services and skilled migration.
Bigger Goals: $500 Billion by 2030
Prime Minister Narendra Modi and President Trump had previously agreed in February to finalize the first phase of the trade pact by autumn 2025. The two sides also set an ambitious target: boosting bilateral trade to $500 billion by 2030—more than double the 2024 figure of £191 billion.
India is simultaneously expanding its global trade footprint, continuing free trade agreement (FTA) negotiations with the European Union and having recently concluded talks with the United Kingdom. These efforts reflect a broader strategy to diversify trade partnerships amid potential shifts in US policy should Trump return to office for another term.
India Seeks Balance
“The ball is now in the US court. India is not interested in a win-lose trade relationship,” said Ram Singh, head of the Indian Institute of Foreign Trade, a government-backed think tank.
Early export data suggests India is weathering the tariff tensions well. Indian exports to the US rose to $17.25 billion during April-May 2025, compared to $14.17 billion a year earlier—indicating that the average 10% tariff hike introduced in early April has had minimal impact so far.
As both nations edge closer to a major trade breakthrough, the outcome of these talks could significantly shape the future of the India-US economic partnership across strategic, commercial, and geopolitical dimensions.
