India-US framework trade deal soon: Commerce Secretary Rajesh Agrawal

Having missed the 'fall' deadline, India is aiming to conclude the first tranche of the trade deal before the end of the calendar year

India and the US are hoping to finalise a framework trade agreement “soon”, commerce secretary Rajesh Agrawal said on Monday, one of a large number of trade deals that New Delhi is negotiating with countries and groupings across the world. 

 

India is moving forward on a range of agreements – from an easier preferential trade deal with Mexico to full-fledged free trade agreements (FTAs) with Canada, the US, Peru, Chile, the EU and Eurasian Economic Union (EAEU).

 

With the US, the talks have been moving in parallel on two tracks – a broader bilateral trade agreement or BTA, which is expected to take longer, and the framework deal that seeks to address the specific issue of 50 per cent American tariffs on Indian exporters.

 

“We have had five-six rounds of negotiations, where we have discussed the full-fledged BTA and also an interim agreement/framework trade deal, which addresses the reciprocal tariff. The visit of the Deputy US Trade Representative (USTR) and the team (to New Delhi last week) was to familiarise him with India,” Agrawal said.

 

“It was also important to stock-take, in terms of the trade relationship with India and the stage of the negotiation – in terms of the BTA and the framework agreement. We are close to a framework deal, but I would not like to put a timeline to it,” Agrawal told reporters in a briefing.

 

With India and the US having missed the ‘Fall’, or autumn, deadline, New Delhi is aiming to conclude the first tranche of the deal before the end of the calendar year. But despite the visit of the US trade team last week, headed by the Deputy USTR Rick Switzer, there is no clarity on when the deal will be finalised.

 

NARROWING DIFFERENCES WITH EU

 

Meanwhile, India is also engaging with the EU as the two sides try to narrow differences and close their FTA talks at the earliest, again with a year-end deadline.

 

Agrawal said the negotiations with the EU have entered their “most difficult” stage. 

 

“We are in the most difficult stage, most difficult issues are on the table...we are trying to ease that out wherever we are finding a fine balance. There is a set of issues on the table...CBAM is definitely on the table,” he said, referring to the Carbon Border Adjustment Mechanism, a controversial European proposal to tax exports of carbon-intensive goods. India views CBAM as a non-tariff barrier.

 

Since the beginning of the month, the two sides have held intense discussions with the aim of working towards concluding the long-pending agreement at the earliest. The 16th round of negotiations took place from 3 to 9 December in New Delhi.

 

Asked if the two sides might consider dropping a few chapters to speed up matters, he said a decision on this will only be taken at the last moment. “I do not think we are dropping (any chapter) as of now. Whatever is on the table is on the table. But in case, in the interest of agreement at some point in time, we feel that there are certain issues or areas that need to be dropped, may be (they will be dropped). That call will be taken at the level of either chief negotiators or my ministers or my level  – but that is not the stage we are at.”

 

MEXICO TARIFFS, OTHER DEALS

 

He said India has proposed a preferential trade agreement (PTA) or a limited trade deal with Mexico, days after it came up with surprise tariffs of up to 50 per cent on imports from its non-FTA partners. A PTA is expected to help Indian exporters deal with the steep tariffs.

 

Mexico imposed tariffs ranging from about 5 to 50 per cent on shipments of a wide range of goods – about 1,463 tariff lines – from countries that do not have a free trade agreement with Mexico.

 

“Technical level talks are on...The only fast way forward is to try to get a preferential trade agreement because an FTA will take a lot of time. So we are trying to see what can be a good way forward,” Agrawal said.

 

“We have proposed a PTA because it's a WTO-compatible way forward... we can do a PTA and try to get concessions that are required for Indian supply chains and similarly offer them concessions where they have export interests in India,” Agrawal said.

 

He also said that the duties are on a most favoured nation (MFN) basis and within WTO bound rates. Besides, Mexico’s primary target is Chinese rather than Indian exports.

 

Mexico has approved the tariff increases from January 1, 2026. Preliminary estimates suggest that this would impact around $2 billion of Indian exports, particularly automobile, two-wheelers, auto parts, textiles, iron and steel, plastics, leather and footwear.

 

On the proposed trade pact with New Zealand, talks are expected to be closed or finalised soon. “We are in a good zone where we hope that the agreement will be closed and finalised soon...It is expected to be done soon,” Agrawal told reporters.

 

The chief negotiators of India and Canada will hold virtual discussions this week to find a way forward on their proposed Comprehensive Economic Partnership Agreement (CEPA).

 

“In two years, countries have moved on, the world has moved on. A lot of other challenges in trade are coming up. We need to take stock as to where we stopped,” he said, adding that the chief negotiators will design the agenda and path forward for the talks.

 

“We are starting talks with Qatar, Israel. We are also thinking of SACU (Southern African Customs Union) – and New Zealand is in the final stages.” With the Russia-led EAEU, the first round of talks was held recently and the second round is scheduled in February next year. Talks with Chile are progressing well, he said, while negotiations with Peru too are moving.

 

“India and Oman are poised to sign the agreement soon,” he told reporters.