India may offer 'forward most-favoured-nation' clause to US in trade deal

New Delhi: India is likely to offer a “forward most-favoured-nation” clause to the United States as part of the proposed bilateral trade agreement, which the two countries target to sign by the fall of 2025, official sources said.

This clause has been rarely granted by India in previous trade negotiations. Forward most-favoured-nation clause would mean that any more favourable tariff offered by India as part of any future deals would automatically apply to the US.

“This clause, in a sense, future-proofs the US deal and is the only way to do so,” news agency Reuters reported quoting one official. The officials declined to be identified because of the private and sensitive nature of the negotiations.

Meanwhile, the Commerce and Industry Ministry announced that in-person sectoral engagements for the bilateral trade agreement will start by May end.

As part of ongoing discussions, representatives of India’s Department of Commerce and the Office of the US Trade Representative met in Washington from April 23-25. This follows earlier bilateral discussions held last month in New Delhi.

“During the meetings in Washington, DC, the team had fruitful discussions on wide ranging subjects covering tariff and non-tariff matters. The team discussed the pathway for concluding the first tranche of the mutually beneficial, multi-sector Bilateral Trade Agreement by fall of 2025, including through opportunities for early mutual wins,” the ministry said in a statement.  

“While productive Sectoral expert level engagements have taken place through the virtual format, in-person Sectoral engagements are planned from end-May,” it added.

India has already made a number of offers and pre-emptive concessions to the US on trade, showing itself more eager than several other big US trading partners including China, Canada and the European Union.

US Treasury Secretary Scott Bessent said on Monday that India could be one of the first to sign a trade deal with the US, possibly as soon as this week or next, although he gave no further details.

India would be keen to avoid or at least lighten President Donald Trump’s proposed 26% reciprocal tariff and other restrictions on it, said Ajay Srivastava, founder of Global Trade Research Initiative, a Delhi-based trade policy think tank, and a former trade
negotiator.

Trump’s team has said it wants to sign deals with India and other trading partners before a 90-day pause on the proposed reciprocal tariffs lapses in July, although some analysts and former officials say it will face steep challenges.

(With Reuters inputs)