With the clock ticking on a 90-day reprieve from US tariffs, India is hustling to wrap up a Bilateral Trade Agreement (BTA) with Washington, balancing domestic red lines on such products as agriculture with the country’s global export ambitions.
The temporary global tariff pause announced by US President Donald Trump as he slapped even steeper levies on Chinese imports is seen by both sides as a strategic trade opportunity. Indian officials are describing it as a “lifetime” opportunity.
The two sides originally set September as the deadline for sealing a deal. But now, for India, the 90 days is a window to lock in smoother trade ties with the U.S. before Trump’s tariff hammer swings again.
For the US, the interest lies in sealing a deal with India amid its intensifying trade war with China. With China facing US tariffs of 145 percent and China imposing counter-tariffs of 125 percent on US goods, Washington is hunting for alternative sourcing and export destinations.
Enter India, with its drive to step up manufacturing and expand exports. “The US appears determined to hit China hard,” says Ajay Sahai, Director General of the Federation of Indian Export Organisations. If the US wants to keep its shelves stocked and prices stable, India’s their best bet. “India remains one of the most reliable suppliers,” Sahai says. He noted that Trump’s 90-day pause on tariffs gives India an opening to work on finalising a BTA with the US.
India is betting that this BTA could serve as a springboard to sharply increase two-way trade with the U.S., offering everything from electronics to pharmaceuticals, textiles to auto parts.
It’s a golden moment for New Delhi to position itself as the go-to replacement for China – targeting its ambitious goal of doubling bilateral trade to $500 billion with the U.S. by 2030.
India and the U.S. have already had multiple rounds of talks – more than any other country currently negotiating with Washington – giving Indian negotiators a strong foundation. Officials are now shifting discussions online, with a physical meeting expected in May to finalise details.
“Our interactions with commerce personnel make us think India has its nose in front on a BTA with the US,” says IIF Capital in a note. Leaders of the US and India initiated BTA discussions right after Trump’s inauguration in January. “We decided we would engage the Trump administration early,” says External Affairs Minister S. Jaishankar.
Commerce Minister Piyush Goyal, speaking just before Trump put his tariff blitz on hold, made it clear that India is pushing hard to get the 26 percent duties on Indian exports rolled back. This week, he met with export and industry bodies to review concerns and opportunities from a BTA agreement.
“We believe that India was not one of those countries which really needed to have tariffs on them because we were already in engagement for a bilateral trade deal, but the US has not differentiated,” Goyal says. “We are in constant engagement. We will be working with them to take off these additional tariffs in the days to come,” he adds.
“The government is being very transparent in what it has been doing,” says Pankaj Mahindroo, chairman of the India Cellular and Electronics Association. “In the first 400 metres India is ahead… because we have the BTA understanding,” he adds. At the same time, Mahindroo said the BTA has to be “very solid so that in the long term we don’t lose out to countries like Brazil, Saudi Arabia, the UAE, Egypt, and Turkey which have lower (US) tariffs.”
The stakes are huge for India as the US is its largest export market, accounting for nearly 20 per cent of its $86-billion in merchandise exports from electronics and pharmaceuticals to textiles and jewellery and a substantial portion of its $341 billion in IT, outsourcing and financial services exports.
The US has already submitted a wish list of goods it wants duty-free access to in India. Though officials are keeping tight-lipped about specifics, reports suggest the list includes US agricultural exports like apples, cherries, pecan nuts, and whiskey. Corn and soybeans are also high on the agenda, though India remains cautious due to concerns over genetically modified (GM) crops.
Indian officials are reportedly leaning toward a “zero-for-zero” deal – no tariffs on 90 percent of industrial goods, similar to what New Delhi is seeking to work out with the EU in areas like textiles and clothing. That way, India secures easier access for its exports without compromising policy flexibility in sensitive areas like agriculture. Right now, the US “reciprocal tariff” imposed by President Donald Trump stands at 10 percent over and above previous tariffs under India’s most-favoured nation (MFN) status.
The US wants India to open its heavily protected market for corn and soybeans – products it’s struggling to place now that China is out of reach. China has slapped counter-tariffs of 84 per cent on US imports. In 2023 alone, China imported over 26 million tonnes of US soybeans – 55 percent of America’s total exports. Without China as a market, US farmers – Donald Trump’s backbone support base – are in big trouble.
But India is still debating whether to allow GM crops like US soybeans, which have long been controversial. A potential middle-ground solution might involve designating specific processing units to handle GM imports, reducing the risk of contamination.
India is also weighing duty-free imports from the US in sectors covered by its Production-Linked Incentive schemes – industries like mobile phones, drones, and specialty steel. These would come with strict “rules of origin” to ensure real value-addition happens within India.
With the US engaged in a bitter trade standoff with China, India may be in the right spot to seal a deal. The stakes are high for India as the US is its largest export market, accounting for nearly 20 per cent of its $86-billion in merchandise exports from electronics and pharmaceuticals to textiles and jewellery and a substantial portion of its $341 billion in IT, outsourcing and financial services exports.
The two countries said in a statement during Prime Minister Narendra Modi’s recent visit to Washington that they were seeking an “innovative, wide-ranging BTA” across the goods and services sector, aiming to “increase market access, reduce tariff and non-tariff barriers, and deepen supply chain integration.”
The stepped-up pace of talks with Washington comes as India and other countries seek to shift several other long-stalled deals into high gear. New Delhi is leveraging the change in global trade dynamics to fast-track negotiations with key partners, especially the UK and the European Union.
India and the UK appear to be on the cusp of a long-awaited free trade agreement, with officials saying 90 per cent of the deal is already negotiated and that both governments are eager to wrap an accord up by year-end.
Remaining issues include tariff cuts on Scotch whisky and automobile imports – long-standing bones of contention. But New Delhi recently made a surprise offer to cut tariffs on US Bourbon whiskey from 150 per cent to 50 per cent – a preemptive move under pressure from Trump. That same concession may now be extended to Scotch whisky. The stakes are high: India is the world’s biggest consumer of Scotch by volume, and fifth by value.
Meanwhile, back in February, Modi and European Commission President Ursula von der Leyen agreed to seal the long-stalled Free Trade Agreement (FTA) with the EU by the end of 2025. While an official roadmap is yet to be made public, both sides are reportedly looking to break the deal into manageable stages to accelerate progress.
India is banking on these FTAs to unlock major long-term export opportunities across Europe and the UK. India is in a stronger negotiating position now. With shifting global dynamics and growing friction between the EU and the US, the European bloc is showing greater openness to addressing India’s concerns around non-tariff barriers like the carbon border tax and deforestation rules, Indian officials say.
India’s main worry about the EU’s Carbon Border Adjustment Mechanism (CBAM) is that it could penalise exports – especially from sectors like steel, cement, and aluminium – by slapping extra charges on goods deemed carbon-intensive. India argues this hurts developing countries still building up their green capabilities.
As for the EU’s deforestation rules, India is concerned that they could complicate or restrict exports of products like coffee, tea, leather, and wood-based goods.