India and the United States have finalized the terms of reference for the initial phase of a bilateral trade agreement, Reuters reported, citing an Indian trade official.
The two nations had earlier agreed, in February, to collaborate on the first stage of the trade pact, aiming to finalize it by the end of this year. The broader goal is to boost bilateral trade to $500 billion by 2030.
The move comes amid recent trade tensions between the two countries, particularly the imposition of 26 per cent reciprocal tariffs on Indian goods by the US earlier this month. However, US President Donald Trump has announced a 90-day pause on tariff hikes for major trading nations, including India.
India has responded by overhauling its tariff regime in recent weeks, reducing import duties on around 8,500 industrial items, including prominent American products such as bourbon whiskey and Harley-Davidson motorcycles.
Phase one deal signals intent to reach $500 billion trade target
The bilateral trade agreement is part of “Mission 500”, an ambitious initiative to more than double current trade volumes and position India as a key partner in global supply chains, especially as US companies seek to diversify away from China. The deal is expected to cover a wide range of sectors, including energy, critical minerals, technology, and manufacturing, with India open to considering zero-duty imports from the US in select industries under its Production-Linked Incentive (PLI) schemes.
Trump’s reciprocal tariff push adds urgency to India–US trade reset
On April 2, dubbed “Liberation Day”, President Trump announced reciprocal tariffs, marking a significant shift towards greater US trade protectionism. He signed an executive order mandating a 10 per cent base tariff on all imports starting April 5, citing long-standing trade imbalances and the need to safeguard US domestic industry.
While the 10 per cent tariff applied broadly, steeper duties were imposed on countries with large trade surpluses with the US — China being the primary target.
US–China trade war escalates while India reduces import duties
This move escalated the US–China trade conflict. Tariffs on Chinese goods were raised to 54 per cent and then surged to 145 per cent. In response, China raised tariffs on US products to 125 per cent and imposed additional export restrictions, particularly on key rare earths.
Meanwhile, India has taken steps to ease friction, slashing duties on thousands of items and signalling openness to trade cooperation with Washington.
Source: Business Standard