India to pursue trade liberalisation with US; in-person trade talks likely to start next month

New Delhi: India has decided to follow the trade liberalisation path with the US, and both countries are negotiating a bilateral trade agreement (BTA) for which in-person talks are expected to begin next month, senior government officials said on Tuesday.

India and the US are starting negotiations in virtual mode from this week. They have also finalised and signed the terms of reference (ToRs) for the pact.

India and the US have been engaged in negotiating a bilateral trade agreement (BTA) since March. Both sides have targeted to conclude the first phase of the pact by the fall (September-October) of this year, with an aim to more than double the bilateral trade to $500 billion by 2030 from about $191 billion currently.

Negotiations of the various track groups for the pact will start virtually within this week.

"We hope to get into physical mode of negotiations may be in the second half of May. So we are on schedule as far as the BTA and its negotiations are concerned," Additional Secretary in the Department of Commerce Rajesh Agrawal told reporters here. He is also the chief negotiator of India for this pact.

Speaking on the agreement, Commerce Secretary Sunil Barthwal said that the agreement, if finalised, will open huge opportunities for both India and US businesses.

"...There are both concerns as well as opportunities for India in terms of the current tariffs (globally). India has already taken a path, where we will be going for trade liberalisation with the US. There is a clear pathway which we have decided at the leaders' level, and then subsequently meetings have been held.

"Negotiations are going on and we have taken a path of trade liberalisation and BTA. So if we follow that path, then I think not only India's trade with the US will grow...that will also open up opportunities for India and for US as well, he said.

Barthwal added that both countries will gain from this BTA and that is the assumption based on which such trade agreements are finalised and negotiated.

Citing examples of India's trade pacts with Australia and the UAE, he said India's trade has improved with the countries.

"So, I expect that a lot of opportunities will come, and there will be a higher trade with the US in case this BTA materialises," Barthwal said.

India, he said, is also looking at non-tariff barriers as well as tariff barriers in the agreement. If these barriers are reduced by both sides, it will lead to higher trade growth for the US and India.

He added that "we will try to see that negotiations close as quickly as possible with the US. That is the path we have taken. So I am very hopeful that we will be able to negotiate a good BTA with the US".

In a trade pact, two countries either significantly reduce or eliminate customs duties on the maximum number of goods traded between them. They also ease norms to promote trade in services and boost investments.

While the US is looking at duty concessions in sectors like certain industrial goods, automobiles (electric vehicles particularly), wines, petrochemical products, dairy, agriculture items such as apples, tree nuts, and alfalfa hay; India may look at duty cuts for labour-intensive sectors like apparels, textiles, gems and jewellery, leather, plastics, chemicals, oil seeds, shrimp, and horticulture products.

From 2021-22 to 2023-24, the US was India's largest trading partner.

The US accounts for about 18 per cent of India's total goods exports, 6.22 per cent in imports, and 10.73 per cent in bilateral trade.

With America, India had a trade surplus (the difference between imports and exports) of $35.32 billion in goods in 2023-24. This was $27.7 billion in 2022-23, $32.85 billion in 2021-22, $22.73 billion in 2020-21, and $17.26 billion in 2019-20.

In 2024, India's main exports to the US included drug formulations and biologicals ($8.1 billion), telecom instruments ($6.5 billion), precious and semi-precious stones ($5.3 billion), petroleum products ($4.1 billion), gold and other precious metal jewellery ($3.2 billion), ready-made garments of cotton, including accessories ($2.8 billion), and products of iron and steel ($2.7 billion).

Imports included crude oil ($4.5 billion), petroleum products ($3.6 billion), coal, coke ($3.4 billion), cut and polished diamonds ($2.6 billion), electric machinery ($1.4 billion), aircraft, spacecraft and parts ($1.3 billion), and gold ($1.3 billion).