India, US officials to begin talks for proposed trade agreement from Wednesday

New Delhi: Senior officials of India and the US will begin three-day talks on the proposed bilateral trade agrement here on Wednesday amid threats of reciprocal tariffs from the Trump-administration, an official said.

To formally start the negotiations on the pact, Assistant US Trade Representative for South and Central Asia Brendan Lynch, along with a team of officials, is here.

He will hold discussions with Additional Secretary in the Department of Commerce Rajesh Agrawal.

The two sides will finalise the contours, schedule of negotiations and terms of reference of the agreement during their deliberations, the official said.

The agreement would be finalised in two phases and the first phase is expected to focus on issues pertaining to goods trade.

India and the US are targeting to conclude the first phase or tranche of the agreement by fall of 2025 (September-October).

Normally in such trade pacts, two countries either significantly reduce or eliminate import duties on maximum (90-95 per cent) number of goods traded between them. Besides, they ease norms to promote trade in services and boost investments.

India has concluded such pacts with countries including UAE, Australia and the EFTA (European Free Trade Association) bloc.

While the US has demanded greater market access in sectors like certain industrial goods, auto, wines and agriculture, India may look at duty cuts for labour intensive sectors like textiles.

The visit of the US team comes against the backdrop of President Donald Trump's plan to impose reciprocal tariffs on countries, including India, from April 2. He has on multiple forums stated that India imposes high tariffs on US goods.

Tariffs are import duties imposed and collected by the government and paid by the companies to bring foreign goods into a country.

Commerce and Industry Minister Piyush Goyal held talks with US Trade Representative (USTR) Jamieson Greer and US Commerce Secretary Howard Lutnick during his three-day visit to Washington earlier this month.

According to trade experts, there are uncertainties about how the Trump administration will impose the reciprocal duties.

During the visit of Prime Minister Narendra Modi to Washington, India and the US announced their commitment to more than double the two-way commerce to $500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector BTA by fall of 2025.

In 2023, the US-India bilateral trade in goods and services stood at $190.08 billion ($ 123.89 billion in goods and $ 66.19 billion in services trade).

In 2023-24, the US was the largest trading partner of India with $ 119.71 billion bilateral trade in goods ($ 77.51 billion worth of exports, $ 42.19 billion of imports, with $ 35.31 billion trade surplus).

India received $ 67.8 billion in foreign direct investments from America during April 2000 and September 2024.

India faces high US tariffs on many labour-intensive goods like textiles, garments, and footwear, ranging between 15-35 per cent on several products. The US has already announced tariffs of 25 per cent on steel and aluminium.

In 2024, India's main exports to the US included drug formulations, biological ($ 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, space crafts and parts ($ 1.3 billion), and gold ($ 1.3 billion).