India, US agree to ‘negotiate first tranche of beneficial, multi-sector bilateral trade agreement’ by fall of 2025

This is the first firm deadline for a bilateral deal after the deal being negotiated in Trump’s first term could not materialise.

After the bilateral meeting between Prime Minister Narendra Modi and President Trump at the White House, Foreign Secretary Vikram Misri said, “The two leaders announced to negotiate the first tranche of beneficial, multi-sector bilateral trade agreement by the fall of 2025… towards advancing this process and this issue did figure in some detail in the discussions as well, both countries will take an integrated approach to strengthen bilateral trade across the goods and services sector. This will include themes such as increasing market access, reducing tariff and non-tariff barriers, and deepening supply chain integration between the two countries.”

He also said the leaders launched Mission 500 aiming to more than double total two-way trade to $500 billion by 2030. He also flagged the recognition of Indian investments in the US including Indian companies’ ongoing investments worth over $7.355 billion.

At the press conference with PM Modi, Trump said, “As we deepen our defence partnership, we will also strengthen our economic ties and bring greater fairness and reciprocity to our trading relationship as a signal of good faith.”

“Prime Minister Modi recently announced the reductions to India’s unfair very strong tariffs that limit our access into the Indian market, very strongly. And, really it’s a big problem. I must say, India imposes a 30 to 40 to 60 and even 70 per cent tariff on so many of the goods, and in some cases, far more than that. As an example, a 70 per cent tariff on US cars going into India, which makes it pretty much impossible to sell those cars today, the US trade deficit with India is almost $100 billion and Prime Minister Modi and I have agreed that we’ll be getting negotiations to address the long-running disparities that should have been taken care of over the last four years, but they didn’t do that in the US India trading relationship, with the goal of a signing an agreement. And we want, really, we want a certain level playing field, which we really think we’re entitled to, and he does also, in fairness, so we’re going to work on that very hard, and we can make up the difference very easily with the deficit, with the sale of oil and gas, LNG, of which we have more than anybody in the world.”

Later, while responding to questions, Trump said, “Well, it has been, to us, just about the highest tariff nation anywhere in the world. They’ve been very strong on tariffs, and I don’t blame them, necessarily, but it’s a different way of doing business. It’s very hard to sell to India because they have trade barriers, and very strong tariffs. We are, right now, a reciprocal nation. We are going to if it’s India or if it’s somebody else with low tariffs, we’re going to have the same we’re going to have whatever India charges. We’re charging them, whatever another country charges, we’re charging them. So it’s called reciprocal, which I think is a very fair way. We didn’t have that.”

“I was going to do that in my other term, and we had the greatest economy ever in the world… There’s never been an economy like we had. And then we got hit with COVID. We had a focus on that, and I was really in the mood to be putting it on Italy and Spain and France and India, frankly, and a lot of other countries, because the world was very troubled until we got rid of that nightmare. But we had the strongest economy anywhere in the world during that fairly long period of time during my first term, as you know, and we didn’t do the tariffs. We would have done the reciprocal tariffs, but we decided, and I decided, I think on a humane basis, not to do them, because of the fact that there was such suffering all over the world. The last thing we needed to talk about is trade problems”.

“But now we do. We’re doing. We see a tremendous future for our country, but we felt that now it’s finally time, after 45 or 50 years of abuse, that we will do. And this isn’t India. This is among a lot of nations. The European Union is very difficult for us, very, very difficult. They tax our companies at a level that nobody’s ever seen before. They take advantage of a lot of things. So we’re not happy about that.”

“China, of course, is terrible… We’ve taken in hundreds of billions of dollars from China since I was in my first term and now. And we have to do that just as a mechanism of fairness, and that’s what I’ve done. And with India, whatever India charges, we charge them. So frankly, it no longer matters to us that much what they charge, because whatever they charge, I had discussions with India and the first term about the fact that their tariffs were very high, and I was unable to get a concession. So we’re just going the easy way. We’re just going to say, whatever you charge, we charge. And I think that’s fair for the board,” he said.

The US is one of the largest trading partners of India with overall bilateral trade in goods and services of $190 billion for the calendar year 2023.

During FY 2023-24, the US was the third largest source of Foreign Direct Investment (FDI) into India with inflows of $4.99 billion. More than 160 Indian companies have a cumulative investment of over $40 billion dollars in the US, and over 2000 American companies have a cumulative investment of over $60 billion in India.