India, US to finalise broad contours of trade agreement: Commerce Ministry

The two countries have also agreed to collaborate to enhance bilateral trade by increasing US exports of industrial goods to India and Indian exports of labour-intensive manufactured products to US

India and the US will sit together in the next couple of weeks to decide on the nature of the proposed trade agreement and finalise its broad contours, a senior official said on Monday.

During the recent visit of Prime Minister Narendra Modi to Washington, India and the US announced to more than double the two-way commerce to USD 500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement (BTA) by fall of 2025.

"Give us a couple of weeks to decide what is the level of ambition in the first tranche (of the agreement) that we are looking at and what is the nature of the agreement that we will be arriving at. The two sides will need to sit together and try to finalise the broad contours," Additional Secretary in the Department of Commerce Rajesh Agrawal told reporters here.

The two countries have also agreed to collaborate to enhance bilateral trade by increasing US exports of industrial goods to India and Indian exports of labour-intensive manufactured products to the US.

The two sides will also work together to increase trade in agricultural goods.

India exports agri goods worth over USD 4 billion to America and that will get a further boost, he said, adding that there is a "tough" timeline for concluding the first tranche of the trade pact.

"Both sides have agreed to do that in the next 8-9 months. So we need to get going and work on that," Agrawal said.

Briefing media, Commerce Secretary Sunil Barthwal said the visit agreed to a roadmap to boost trade ties between the two countries.

Normally in a free trade agreement, two trading partners either eliminate or significantly reduce customs duties on the maximum number of goods traded between them. Besides, they ease norms to promote trade in services and boost investments.

During the first term of US President Donald Trump, the two countries had discussed a mini-trade deal, but it was shelved by the Joe Biden administration as they were not in favour of such pacts.

According to think tank GTRI (Global Trade Research Initiative), for 75 per cent value of the US exports to India, the average tariff is less than 5 per cent. In contrast, India faces high US tariffs on many labour-intensive goods like textiles, garments, and footwear, ranging between 15 per cent and 35 per cent on several products.

In 2023, the US and India bilateral trade in goods and services stood at USD 190.08 billion (USD 123.89 billion in goods and USD 66.19 billion in services trade). In that year, India's merchandise exports to the US stood at USD 83.77 billion, while imports were USD 40.12 billion, leaving a trade gap of USD 43.65 billion in favour of India.

The country's services export to America was USD 36.33 billion in 2023, while imports were aggregated at USD 29.86 billion. The trade gap (difference between imports and exports) was USD 6.47 billion in favour of New Delhi.

During 2021-24, America was the largest trading partner of India. The US is one of the few countries with which India has a trade surplus.

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

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