India-US Bilateral Trade Agreement (BTA) Negotiations

Following US President Donald Trump's temporary suspension of reciprocal tariffs, India is seizing the opportunity to push for a bilateral trade agreement (BTA) with the US and expedite the finalization of the first tranche of the trade deal.

• 90-Day Window:
  • The US paused the 26% reciprocal tariff on Indian imports for 90 days, providing India a chance to advance trade discussions.
  • Uncertainty remains if the pause will extend beyond this period.
• Potential Benefits:
  • Finalizing the first tranche of the BTA could offer relief to Indian exporters even if tariffs resume.
• Trade Agreement Goals:
  • In February, Indian PM Narendra Modi and US President Trump aimed to finalize the BTA's first phase by fall 2025.

International Trade Dynamics

The US's reciprocal tariff plans have triggered global trade negotiations, with several countries seeking free-trade agreements (FTAs) with India.

• Current Negotiations:
  • India is engaging with the UK, EU, New Zealand, Peru, Chile, and Oman.
  • Talks with Bahrain, Qatar, and the Gulf Cooperation Council (GCC) may also develop.
• Strategic Moves:
  • India plans to expedite trade agreements with the UK and EU.
  • A target to sign an FTA with the EU by the end of 2025 has been set, although formal announcements are pending.

India's Strategic Position

India perceives these trade deals as key to long-term growth and export boosts amidst shifting geopolitical conditions.

• Enhanced Negotiating Power:
  • The changing geopolitical landscape, including US-EU tensions, strengthens India's position.
  • The EU is more open to addressing India's concerns, such as the carbon border adjustment mechanism (CBAM) and deforestation regulation.
• Efforts Against Tariffs:
  • Commerce Minister Piyush Goyal emphasized ongoing efforts to remove the 26% US tariff on Indian goods.