India and the United States have signed the terms of reference for the initial phase of a bilateral trade agreement, an Indian trade official announced on Tuesday.
The two countries had agreed in February to begin work on the first stage of the deal, aiming to finalise it by the end of the year as part of a broader goal to boost bilateral trade to $500 billion by 2030.
The two sides had initially agreed in February to work toward a phased trade deal, aiming to conclude the first stage by the end of 2025. Their broader goal is to scale bilateral trade to $500 billion by 2030. Virtual discussions are set to begin this month, with the next in-person round scheduled for mid-May, said Rajesh Agrawal, an additional secretary in the trade ministry.
In a significant development, India is reportedly open to slashing tariffs on over half of the $23 billion worth of US imports in this first phase — potentially the biggest tariff cut in years. This signals a major policy shift as India seeks to strengthen ties with Washington amid global trade realignments.
Adding to the momentum, US President Donald Trump on Wednesday announced a 90-day pause on most tariff hikes for major trading partners, including India, while sharply increasing tariffs on Chinese goods. The temporary reprieve offers breathing room for Indian exporters.
Despite occasional tensions, including Trump’s repeated references to India as a “tariff abuser” and “tariff king”, both nations have shown willingness to move past their tariff disputes. Prime Minister Narendra Modi’s high-profile visit to Washington earlier this year helped revive dialogue, with India pledging to buy more US defense and energy products as a goodwill gesture.
The US currently runs a $45.6 billion trade deficit with India, making this deal crucial for both sides as they aim for a more balanced trading relationship.
(With inputs from Reuters)