Ministerial Talks Scheduled for This Week
US Trade Representative Jamieson Greer and India's Commerce and Industry Minister Piyush Goyal will hold two-day talks this week on the first phase of the bilateral trade agreement (BTA). Goyal confirmed the meeting in Mumbai, stating, "For the US trade deal talks, tomorrow my counterpart is coming to Delhi." The meeting follows chief negotiator-level discussions held earlier this month (June 2-4) in New Delhi.
Urgency Driven by Expiring US Temporary Tariffs
The talks are critical as the 10 per cent temporary tariff imposed by the US on all trading partners on February 24, 2026, for 150 days will expire on July 24. After that, most favoured nation (MFN) tariffs will come into force on US imports. The temporary tariff is levied over and above the MFN duty, so a new tariff regime must be in place before July 24. Commerce Secretary Rajesh Agrawal recently stated that the ministerial discussions are expected to focus on finalising the framework deal.
Section 301 Probes and Their Impact
In March, the US Trade Representative launched two Section 301 investigations against several countries, including India, over excess capacity and forced labour in global supply chains. On June 2, the USTR proposed imposing 12.5 per cent tariffs on 54 countries, including India, for allegedly failing to prohibit imports of goods produced with forced labour. This measure remains a proposal and has not been finalised; interested parties can submit requests to appear at hearings by June 22, with hearings scheduled for July 7. The report of the second probe is awaited.
Background: US Supreme Court Ruling
On February 20, the US Supreme Court ruled against President Donald Trump's sweeping reciprocal tariffs imposed under the 1977 International Emergency Economic Powers Act (IEEPA), which had placed a 50 per cent tariff on India. Following the ruling, Trump announced 10 per cent tariffs on all countries for 150 days starting February 24.
Framework of the First Phase of BTA
On February 7, India and the US issued a joint statement finalising the contours of the first phase of the BTA. Under that framework, the US had agreed to reduce tariffs on India to 18 per cent from 50 per cent and had removed the 25 per cent tariffs on Indian goods for buying Russian oil, with a plan to cut the remaining 25 per cent to 18 per cent. However, the Supreme Court ruling changed the tariff landscape, prompting both sides to relook at the agreement's framework. The February joint statement includes a clause allowing either country to modify its commitments if the other's tariffs change.
India's Proposed Concessions and Purchases
Under the agreed framework, India proposed to eliminate or reduce tariffs on all US industrial goods and a wide range of food and agricultural products, including dried distillers’ grains (DDGs), red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits. New Delhi also expressed intentions to purchase USD 500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years.
India Seeks Comparative Tariff Advantage
When the framework was finalised, India had a comparative tariff advantage over competitor countries such as ASEAN nations, Sri Lanka, Pakistan, and Bangladesh. Under the framework, the US had announced an 18 per cent tariff on Indian goods, while tariffs on competing countries ranged from 19 to 20 per cent. However, now all countries face the same 10 per cent additional levy. Sources have stated that it is important for India to gain a tariff advantage over its competitor nations in the trade pact with the US. For example, if the US imposes an 18 per cent tariff on imports from India and a 20 per cent tariff on goods from Vietnam, Indian products become relatively more competitive in the US market.
Trade Statistics
The US was India's second-largest trading partner in 2025-26. India's exports to the US grew marginally by 0.92 per cent to USD 87.3 billion in the last fiscal year, while imports increased 15.95 per cent to USD 52.9 billion. The trade surplus declined to USD 34.4 billion in 2025-26 from USD 40.89 billion in 2024-25.
