India-US trade deal ends but no sign of relief on reciprocal tariffs

India and the United States have concluded a four-day series of trade discussions in New Delhi, marking significant progress toward a bilateral trade agreement (BTA) anticipated to be finalized by Fall 2025.

The talks, however, did not yield immediate relief regarding the reciprocal tariffs set to be imposed by the US from April 2.

The Indian Commerce and Industry Ministry stated that both nations have "broadly agreed on the next steps towards a mutually beneficial, multi-sector BTA," with sectoral expert-level engagements scheduled to commence virtually in the coming weeks, followed by in-person negotiations.

Despite this progress, the absence of finalized Terms of Reference (ToR) indicates that critical issues remain unresolved.

Trade experts note that ToRs typically outline the scope and objectives of trade agreements and are often established at a political level.

Previous negotiations between India and the US have faced challenges over market access in agriculture and data localization policies.

The impending US reciprocal tariffs have heightened the urgency for India to seek exemptions.

President Donald Trump has emphasized the need for fair trade practices, highlighting India's average tariff rate of 12% compared to the US average of 2.2%.

He has described India as "one of the highest tariffing nations in the world" and expressed confidence that ongoing discussions with Prime Minister Narendra Modi will lead to favorable outcomes.

In response, India has proposed reducing tariffs on $23 billion worth of US imports, including agricultural products such as almonds, cranberries, and bourbon whiskey.

This initiative aims to mitigate the impact of the forthcoming US tariffs and strengthen bilateral trade relations.

Furthermore, India has repealed the 6% "Google tax" on online advertisements, a move designed to facilitate smoother trade negotiations and address concerns raised by major US tech companies operating in India.

Both countries have committed to enhancing market access, reducing tariff and non-tariff barriers, and deepening supply chain integration.

These efforts are part of a broader strategy to increase bilateral trade to $500 billion by 2030.

While the recent talks have laid the groundwork for a comprehensive trade agreement, the lack of immediate relief from reciprocal tariffs underscores the complexities involved.

Both nations will need to navigate these challenges carefully to achieve a balanced and mutually beneficial trade relationship.