India, US to sign first tranche of formal trade agreement by mid-March

India and the United States are set to sign the first tranche of a formal trade agreement by mid-March, Commerce and Industry Minister Piyush Goyal said, following a joint statement expected shortly

India and the United States plan to issue a joint statement in the next four to five days, finalising the first tranche of the trade agreement, which will be followed by a White House executive order cutting tariffs on Indian exports to the US to 18 per cent from 50 per cent.

 

The joint statement will be followed by the signing of the first tranche of a ‘formal’, ‘legal’ trade agreement between India and the US by mid-March, commerce and industry minister Piyush Goyal said on Thursday.

 

Discussions between the two countries on the first phase of the deal will be crystallised through the joint statement, which will lay out the mutual understanding reached and share the key elements of the agreement.

 

 

“Based on the joint statement, a formal agreement will be drafted, which may take a month or a month and a half to finalise. We aim to sign the formal agreement by mid-March,” Goyal told reporters.

 

India will reduce tariffs on products agreed under the trade deal after the formal agreement is signed. The legal agreement will authorise the Indian government to implement the tariff elimination and reduction. India’s tariffs are most-favoured-nation (MFN) rates — as per global trade rules — and can be tweaked only after a trade agreement has been formally signed.

 

Once signed, the agreement with the US will be India’s ninth trade deal signed in the last five years.

 

Negotiations for a trade agreement with the US were launched in March last year.

 

After a phone call with Prime Minister Narendra Modi, US President Donald Trump on Monday announced that the much-awaited trade deal with India has been agreed upon and tariffs will be slashed to 18 per cent from 50 per cent. The agreement came over five months after Washington imposed 50 per cent tariffs on several Indian exports, including a 25 per cent punitive duty for India’s purchases of Russian oil.

 

$500 billion purchases from US

 

Trump had also said that India has committed to ‘buy American’ at a much higher level, in addition to over $500 billion of US energy, technology, agricultural, coal, and many other products.

 

India intends to buy goods worth $500 billion from the US over the next five years, which will include purchases across sectors such as oil and gas, aeroplanes and parts, precious metals and diamonds, and tech products such as hi-tech chips and server products. It will include $20 billion worth of tech products that go into setting up data centres.

 

“When we estimated what we will need from the US, we came to a figure of at least $500 billion. Our aircraft demand alone — orders placed on Boeing — are nearly $70–80 billion. If you add engines or other spare parts, it will cross $100 billion. Data centres have been given huge concessions in the Budget. If we get $100–150 billion of investment in data centres, we will need equipment for them,” Goyal told reporters.

 

As per commerce department calculations, India’s current global purchases of these items exceed $300 billion per year and are expected to go up to $2 trillion in the next five years. Procuring $500 billion worth of these items from the US will only result in diversification and add resilience to India’s supply chain.

 

Explaining New Delhi’s intent to buy goods worth $500 billion from the US over the next five years, Goyal on Wednesday had pointed out that India’s attempt to become a developed nation will require expansion in capacity in sectors including energy, aviation, data centres, and nuclear energy. Since the US is a global leader in these sectors, India will explore trade possibilities that will boost imports and exports, he had informed Parliament.

 

The US is India’s largest export destination. During the financial year 2024–25, India exported goods worth $86.5 billion to the US, while importing goods worth $45.6 billion.