US President Donald Trump on Wednesday said a trade deal with India is around the corner, in his first confirmation of a rapprochement with New Delhi after the bilateral economic ties soured.
“I am doing a trade deal with India. I have the highest respect and love for Prime Minister Modi. We have a great relationship,” Trump said in South Korea. He was addressing the Asia-Pacific Economic Cooperation (APEC) CEOs Luncheon in Gyeongju, South Korea on the last leg of his Asia visit.
Trump’s statement bears out comments by a senior official here earlier this week that “India and US are very close to a trade agreement with convergence reached on most issues.” The official, speaking on condition of anonymity, added that the negotiators were about to find some common ground on “pending issues’, without elaborating what these were. “We don’t see any new issue arising now.., We are discussing non-tariff barriers,” the official had said, hinting that the key sticking point of tariffs has been resolved.
Five rounds of negotiations have been completed for the first phase of the Bilateral Trade Agreement (BTA). After the latest round of talks that ended on October 17, both sides have started work on the legal text of the agreement. Commerce Secretary Rajesh Agrawal visited the US earlier this month to take forward the BTA talks after a deadlock.
While the fall deadline for the initial tranche of BTA was set by both sides and both sides were sounding confident of a deal in the offing, that was not to be, as differences persisted.
India was particularly reluctant to open up its farm and dairy sectors, while the US was insistent on concessions on this front.
Belying expectations, Trump announced a reciprocal tariff of 25% on India too along with different levels of additional levies for most other countries on August 7. Subsequently, on August 27, the US imposed another 25% tariff on India as a penal measure for buying oil from Russia and since then Trump has been vocal about the need for India to cut back on its oil imports from Russia .
The sixth round of BTA talks was postponed as Trump went ahead with 25% additional Russian oil-related tariffs.
The recent stringent sanctions on Russia’s Rosneft and Lukoil has created the situation conducive for India to reduce Russian oil purchases, and signs of this are already visible.
Trump’s comments lifted the stock market. The shares of textile and marine product companies rose between 2-4% on Wednesday. These are the sectors hit hardest by the 50% additional duties imposed by Trump on Indian products.
In the talks, India is seeking removal of additional tariffs imposed by the US and some reduction in normal import duties.
The US is the biggest market for India’s merchandise exports. In 2024 India-US goods and services trade totaled an estimated $212.3 billion, up 8.3 percent ($16.3 billion) from 2023. Total goods trade was an estimated $128.9 billion India’s exports at $87.3 billion and imports at $41.5 billion.