The US and India were close to finalising a comprehensive Bilateral Trade Agreement (BTA), according to recent statements by US President Donald Trump. The framework for the deal was initially established in February 2026, but flip-flops on issues such as India’s import of crude from Russia have marred the negotiations.
“We can’t say that the US is to blame for all the trade problems,” says S. Jaishankar, India’s minister for external affairs. He describes the trade agreement under negotiation as a ‘big step’ with great possibilities. “When I stand back and look at the relationship between India and the US, I note that the rest of the world has had an even more difficult relationship with the US. That may not be a consolation, but that is a reality,” explains Jaishankar, adding that the trade negotiations were marred by ‘stakes’ and `complexities’.
“They want to make a deal and we are going to make a deal; we are pretty close,” said President Trump in the Oval Office in response to a question on the BTA. US Secretary of State Marco Rubio too has acknowledged that the deal between the two nations is close to completion. The US has projected bilateral trade of $500 billion over the next three years. At present, the bilateral trade is $140.79 billion for 2025-26, making the US the second-largest trading partner of India after China.
“The first tranche of the US bilateral trade agreement has been finalised,” Piyush Goyal, minister for commerce & industry, had said earlier. “It’s going through the final contours, the legal drafting. We hope to be able to finalise it soon and operationalise it once we get comparable advantage or competitive advantage over our peer countries”.
The negotiations are being led by Goyal from the Indian side and Jamieson Greer, trade representative of the US. They have focussed on cutting tariffs and expanding market access.
As of now, what is understood is that under this agreement, India is committed to purchasing $500 billion worth of American goods over the next five years, with a focus on US energy (LNG and crude), advanced technologies, agriculture and raw materials.
The US, in turn, has reworked its tariffs for India – dropping certain import tariffs from highs of 50 per cent down to 18 per cent. India too has offered competitive access – including zero-tariff frameworks on certain sectors.
A few bottlenecks
Bottlenecks in the deal include India’s purchase of Russian crude. According to a new US legislation, 100 per cent tariffs could be levied on countries buying Russian crude (which includes India). India has, however, maintained that it would buy crude from multiple sources, wherever it gets the best deal.
India’s finance ministry has reaffirmed that energy choices are a matter of strategic autonomy and economic sovereignty and, so, the country refuses to offer its energy security as a bargaining chip.
The US goods trade deficit with India has reached $58.4 billion. “A trade negotiation requires a certain amount of patience and detailing to see it through,” Jaishankar adds. “The expectation that it could rapidly move forward, I think, was tested against a ground reality, which was more complex”. Both India and the US have now reached a situation where they are close to an understanding on the trade agreement.
Terms of agreement
The deal (according to the US Government) states that:
• India will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers’ grains (DDGs), red sorghum, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and other products. India will buy more American products and purchase over $500 billion of US energy, information and communication technology, coal and other products.
• India will address non-tariff barriers that affect bilateral trade in priority areas. The US and India will negotiate rules of origin that ensure that the agreed benefits accrue predominantly to the US and India.
• India is committed to negotiating a robust set of bilateral digital trade rules that address discriminatory or burdensome practices and other barriers to digital trade.
• The US and India are committed to strengthening economic security alignment to enhance supply chain resilience and innovation through complementary actions to address non-market policies of third parties, as well as co-operating on inbound and outbound investment reviews and export controls.