India and the United States are set to hold ministerial-level negotiations this week to advance the first phase of their proposed bilateral trade agreement (BTA), with US Trade Representative Jamieson Greer arriving in New Delhi for two days of talks with Commerce and Industry Minister Piyush Goyal.“For the US trade deal talks, my counterpart will come to Delhi tomorrow,” Goyal told reporters in Mumbai.The high-level engagement follows discussions at senior negotiator level held in New Delhi from June 2 to 4, and is expected to focus on finalizing the framework of the interim trade agreement.Commerce Minister Rajesh Agrawal recently said that discussions between the two ministers are likely to revolve around giving final touches to the framework agreement.On June 5, Goyal said India and the US were moving towards closing all open issues in the interim agreement and would likely implement the “very vibrant” first phase of the FTA by the middle of next month.
Why are the next few weeks important?
The talks gain importance as the temporary 10% tariff imposed by the US on all trading partners on February 24 for 150 days is set to expire on July 24.Once the temporary tariffs expire, the United States will need to establish a new tariff regime.
The additional tariff is charged in addition to the Most Favored Nation (MFN) fee.To determine the future tariff framework, Washington is currently conducting two Section 301 investigations involving several countries, including India.
Investigations into Section 301 are ongoing
In March, the US Trade Representative launched two Section 301 investigations under the Trade Act of 1974 covering several countries, including India, into industrial overcapacity and the alleged failure to eliminate forced labor from global supply chains.On June 2, the US Trade Representative proposed 12.5% tariffs on imports from 54 countries, including India, citing a failure to ban goods produced through forced labor.The proposal has not yet been finalized. Interested parties can submit hearing requests and summaries of testimony until June 22, while hearings are scheduled for July 7.The results of the second investigation are still awaited.
Recalibrate the trading framework
The current negotiations are also taking place against the backdrop of changes in US tariff policy.On February 20, the US Supreme Court ruled against reciprocal tariffs imposed by President Donald Trump under the International Emergency Economic Powers Act (IEEPA), under which India was facing a 50% tariff.Following the ruling, the United States replaced these measures with a temporary 10% tariff regime that remains in place until July 24.India and the United States had earlier agreed on the framework for the first phase of the FTA in a joint statement issued on February 7.Under this framework, the US agreed to reduce tariffs on Indian goods to 18% from 50%. It also eliminated a 25% tariff on Indian goods linked to the purchase of Russian oil, and is expected to reduce the remaining 25% tariff to 18% under the agreement.However, the Supreme Court ruling has changed the tariff landscape, prompting both sides to reconsider elements of the framework.The February joint statement contains a clause allowing either country to amend its obligations if the agreed upon tariff structure changes.
India seeks to gain a definitional advantage over competitors
Securing a tariff advantage over competing exporting countries remains a key goal for India, sources told news agency PTI.When the framework was initially agreed, Indian goods were to face an 18% tariff, while competing countries such as Vietnam and other ASEAN economies were expected to face tariffs of between 19% and 20%.However, under the US temporary system, all countries currently face the same 10% additional tax.According to sources, India wants the final trade agreement to restore the differential tariff structure that gives Indian exporters an advantage over competitors such as Vietnam, Bangladesh, Pakistan and ASEAN countries.This advantage would make Indian products relatively cheaper in the US market and may help exporters gain market share.
Trade relations remain strong
The United States was India’s second largest trading partner in 2025-26.India’s exports to the US rose 0.92% to US$87.3 billion during the fiscal year, while imports increased 15.95% to US$52.9 billion.India’s trade surplus with the United States narrowed to US$34.4 billion in 2025-26 from US$40.89 billion in the previous year.