First Phase of India–US Trade Talks to Tackle ‘Reciprocal Tariffs’, Closure Expected Soon

The first tranche of the India-US bilateral trade agreement (BTA) will address solely reciprocal tariff issues, including the “penalty” linked to India’s purchases of Russian oil, a senior commerce ministry official said on Monday. While the broader BTA will take longer to conclude, the official noted that the first phase of negotiations is now close to being wrapped up.

"It's difficult to give a timeline, but the first phase of negotiations is nearing closure," the official said.

On the tariff discussions, the official stressed that both sides must address duties on goods and the oil-related penalty in tandem. “Common sense says both need to be addressed together. One without the other will not yield much of an outcome. A trade deal addressing reciprocal tariffs but leaving oil tariffs untouched will not have much impact,” the official said. However, they added that oil tariffs would not be part of the agreement to be signed.

Last week, the ministry informed that India-US trade talks had gained momentum and that India was awaiting a response from Washington, with no additional negotiation round expected. It was also said that India’s negotiations with the US have been among the most comprehensive and WTO-compliant compared to those with any other country.

Tariff Blitz

The October trade date showed that India's merchandise trade deficit widened to a record $41.68bn in October, due to an increase in gold and silver imports and a fall in exports to the US under steep new tariffs.

India’s exports to the US fell nearly 9% year-on-year in October to $6.31bn from. October marked the second full month in which 50% tariffs were in force on most Indian goods entering the American market. The US remains India’s largest export destination, and officials expect some improvement in outbound shipments in November.

India-US BTA

The leaders of both countries launched BTA negotiations in February, targeting completion of the first tranche by the autumn. The pact aims to more than double bilateral trade to $500bn by 2030, up from the current $191bn.

However, the landscape shifted sharply after US President Donald Trump rolled out his so-called reciprocal tariffs in April, placing India among the hardest-hit partners.

In September, the first full month with 50% tariffs, India’s merchandise exports to the US dropped 11.93% to $5.46bn, while imports rose 11.78% to $3.98bn. India’s overall trade deficit that month climbed to a 13-month high of $32.15bn.