India and the US are likely to reach an agreement on an interim trade deal in June. This could bring relief to India from US tariffs. Both countries aim to increase trade to $500 billion by 2030.
Trump Tariff: India and the US are preparing to reshape their trade relationship. An interim trade agreement is expected to be finalized next month following a visit by a high-level team of US officials to India in June. This agreement is anticipated to provide India with relief from substantial US tariffs, strengthening bilateral trade ties.
What are the plans for the India-US Trade Agreement?
India and the US have been engaged in discussions for a bilateral trade agreement for some time. This agreement will be finalized in two phases, the first being an interim trade agreement. The objective of this agreement is to reduce trade barriers and provide tariff concessions between India and the US.
Sources suggest that a formal agreement is expected by June 2025. If this happens, it would be a significant achievement for India. Previously, the US imposed a 26% tariff on several Indian products. While this tariff is currently temporarily suspended, a 10% base tariff remains in place. India aims to secure complete exemption from the 26% tariff through this agreement.
Why is this agreement crucial for India?
The US is a vital trading partner for India. According to fiscal year 2024-25 data, bilateral trade between India and the US reached $131.84 billion. India's trade surplus with the US is also steadily increasing, reaching $41.18 billion, indicating India exports significantly more to the US than it imports.
This growing surplus has raised concerns in the US, which aims to reduce its trade deficit with India. This trade agreement could therefore benefit both nations.
This agreement is also essential for India as it will strengthen its trade ties with the US and provide Indian companies with greater access to the US market.
Key Points of the India-US Trade Deal
- Agreement on an Interim Trade Agreement between India and the US is expected by June 2025.
- A high-level US team is visiting India next month; negotiations are in the final stages.
- India's demand: Complete relief from the 26% tariff.
- US: Concerned about its trade deficit with India, seeks balance.
- Both countries aim for bilateral trade exceeding $500 billion by 2030.
- In 2024-25, bilateral trade between India and the US was $131.84 billion, with a $41.18 billion trade surplus for India.
