WORK IN PROGRESS

A trade deal with the United States struck within days of a historic India-EU FTA, dramatically slashed tariffs on Indian exports. BW Businessworld attempts to scan the fine print of the much-awaited pact with India's largest trading partner

- By Sangeet Kumar Sanu

[India-US Trade Deal]

AT THE END OF A TELEPHONE conversation with Prime Minister Narendra Modi, United States President Donald Trump announced a bilateral trade agreement between the two nations on 2 February, slashing tariffs on exports from India to 18 per cent from 25 per cent announced earlier. On 6 February, both nations released a joint statement outlining the framework of the proposed Bilateral Trade Agreement (BTA) that marks a step forward in bilateral trade ties.

President Trump also claimed that New Delhi had agreed to curb purchases of Russian oil while increasing energy imports from the US and potentially Venezuela, signalling a shift that aligns with Washington's broader energy and geopolitical priorities. In a post on his social media platform, Trump described his exchange with Prime Minister Modi as “very productive,” calling the Indian leader “one of my greatest friends and a powerful and respected leader”.

The India-US trade deal came close on the heels of India’s free trade agreement (FTA) with the European Union on 27 January, fuelling speculation that Washington had accelerated negotiations to avoid losing ground in the Indian market. Dhananjay Tripathi of the South Asian University, however, viewed the development as a natural convergence between India and the United States.

“India is strategically relevant to the US, and the Indian market is important for American businesses. The imposition of tariffs, including punitive measures linked to Russian oil, suggested that the Administration was not fully accounting for volatile geopolitical realities,” he said. The United States is India’s largest trading partner and as of 2024 the total bilateral goods trade had reached approximately $130 billion. The US recorded a trade deficit of about $45 billion with India that year. The total bilateral trade in services between the two nations was worth $83 billion as of 2024.