India-US Trade Agreement Advances with First Tranche Ready
Details of the newly announced India–United States trade agreement are expected to gain more clarity in the coming days, as Union Commerce and Industry Minister Piyush Goyal has confirmed that the first tranche of the bilateral agreement is now prepared. This significant development marks a crucial step forward in the trade negotiations between the two economic giants.
Timeline for Implementation and Tariff Reductions
A joint statement outlining the agreement's specifics is anticipated within the next four to five days, which will pave the way for the United States to issue an executive order lowering tariffs to 18%. The formal legal pact between India and the US is likely to be signed around mid-March, establishing a structured framework for enhanced trade relations.
The announcement was made on Thursday during the signing ceremony of the terms of reference for a Free Trade Agreement between India and the Gulf Cooperation Council. Minister Goyal emphasized the scale of India's growing economic engagement with Washington, stating, "Our orders for US aircraft and engine etc will alone cross $100 billion."
Tariff Structure and Legal Requirements
Outlining the tariff structure differences between the two nations, Commerce Secretary Rajesh Agrawal explained, "Their (US) tariffs are executive tariffs. Our tariffs are MFN tariffs. So (our) MFN tariffs reduction only can take place after the legal agreement has been signed." He further clarified that this reduction "will only happen after the legal agreement has been signed."
Background and Negotiation Process
The India–US bilateral trade agreement has been under negotiation since Prime Minister Narendra Modi's visit to the United States in February 2025. The deal was publicly announced following a phone call between PM Modi and President Trump on February 2, 2025.
Addressing questions raised by Members of Parliament in the Lok Sabha, Minister Goyal revealed that negotiations had been underway at multiple levels for nearly a year. "Negotiators from both sides have been at various levels over the past year. During the negotiations, both sides safeguarded their important and sensitive sectors from the trade deal, at the same time ensuring maximum benefits for both countries," he stated.
Protection of Sensitive Sectors
Minister Goyal further assured that India ensured protection for key sensitive sectors, particularly agriculture and dairy, while acknowledging that some sectors were particularly important from the US perspective. "There were sectors which were important and sensitive from the US point of view. After negotiations for nearly a year, both sides have been successful in finalizing several areas of the bilateral trade agreement," he explained.
Ambitious Trade Goals and Key Participants
Formally proposed in February 2025 following directions from the leadership of both countries, the bilateral trade agreement aims to dramatically increase two-way trade from $191 billion to $500 billion by 2030. This ambitious target reflects the growing economic partnership between the world's largest democracy and one of its most powerful economies.
The GCC FTA signing event was attended by senior officials from both sides, including:
- Commerce Secretary Rajesh Agrawal
- India's chief negotiator Ajay Bhadoo
- GCC chief negotiator Raja Al Marzouki
- GCC director general for FTA Abulrazzaq Aljraid
- Ministry of External Affairs Additional Secretary Aseem Mahajan
This comprehensive trade agreement represents a strategic move to strengthen economic ties between India and the United States, with both nations working diligently to balance their respective interests while maximizing mutual benefits through structured negotiations and careful sectoral protections.
