Roving Periscope: India may become first nation to ink trade deal with the US
Virendra Pandit
New Delhi: India is on the verge of becoming the first nation to clinch a trade pact with the US, potentially dodging President Donald Trump’s steep 26 percent tariff and deepening bilateral ties to the next level, the media reported on Thursday.
This follows the remarks made on Tuesday by visiting US Vice President J D Vance in Jaipur that the two countries had finalized the terms of reference for the long-awaited Bilateral Trade Agreement (BTA).
The latest indication came on Wednesday when US Treasury Secretary Scott Bessent said that India is on track to become the first country to finalise a BTA aimed at avoiding President Trump’s proposed reciprocal tariffs after the 90-day pause.
While the fresh Trump tariffs will impact around 100 countries, some 20 nations are said to be negotiating trade and tariffs with the US.
During a media roundtable held alongside the annual meetings of the World Bank and the International Monetary Fund (IMF) in Washington, Bessent said trade negotiations with India are nearing completion, because of India’s relatively open trade practices.
“India also has fewer non-tariff trade barriers. Obviously, no currency manipulation, very, very little government subsidies, so that reaching a deal with the Indians is much easier,” the New York Post quoted him as saying.
India currently faces a 10 percent base tariff under the existing US policy, along with a proposed 26 percent ‘reciprocal’ tariff on its exports, which has been temporarily paused for 90 days, until July 8, 2025. The higher tariff is part of a broader strategy by President Trump to pressure trading partners into lowering trade barriers and reducing US trade deficit.
On Tuesday, Vice President Vance, speaking in Jaipur, urged India to expand its markets and reduce non-tariff barriers. He also urged New Delhi to increase imports of American energy and military equipment, framing these measures as steps toward a more robust US-India partnership.
He also outlined a strategic vision for closer collaboration between the two democracies in pursuit of a ‘prosperous and peaceful’ 21st century.
According to the New York Post, which cited US Census Bureau data, India accounted for nearly 3 percent of American imports as of February 2025. The Office of the US Trade Representative reported a USD 45.7 billion trade deficit with India in 2024.
Despite this trade imbalance, Bessent expressed optimism, noting that India’s relatively low tariffs and trade barriers make it a more straightforward partner in ongoing negotiations. “India doesn’t have so many high tariffs,” he added, suggesting a smoother path to agreement compared to other nations.
The BTA is a key component of a broader US-India initiative titled ‘Catalysing Opportunities for Military Partnership, Accelerated Commerce & Technology’.
Launched in February 2025, this strategic programme aims at strengthening economic and military ties between the two nations, focusing on enhanced cooperation in areas such as trade, technology exchange, and defence collaboration.
As part of a revised trade framework announced by President Trump on April 2, the US imposed a 26 percent reciprocal tariff on imports from India. This move aligns with Washington’s broader push to address trade imbalances and enforce equal treatment for American goods abroad.
In addition to the reciprocal measure, a general 10 percent base tariff has been applied to all US imports starting April 5.
Some critical sectors have been excluded from the reciprocal tariff regime. These include pharmaceuticals, semiconductors, and a range of energy commodities such as oil, gas, coal, and liquefied natural gas. These exemptions aim to safeguard industries vital to both countries’ economic and strategic interests.
