India and the United States are moving closer to finalising their proposed bilateral trade agreement, with preferential tariff treatment for Indian exports emerging as a key outstanding issue.
Commerce Secretary Rajesh Agrawal said the agreement is “more or less finalised”, with both sides working through a few remaining issues before it is signed. The US is developing a tariff framework that could give Indian exporters preferential market access compared with key Asian competitors.
India has been seeking a clear tariff advantage over competing exporters such as Vietnam, Bangladesh, Indonesia and Malaysia. Commerce and Industry Minister Piyush Goyal has said New Delhi will finalise the agreement once Washington provides Indian exporters with preferential tariff rates relative to these competitors.
The tariff framework has become more complicated following changes in US trade policy and the US Supreme Court’s ruling against the reciprocal tariffs that had formed part of the earlier negotiating framework. Washington is now considering other tariff mechanisms, including measures under Sections 301 and 232 of US trade law, to establish differentiated market access.
For India, securing a relative tariff advantage is particularly important for export-oriented sectors competing directly with lower-cost Asian suppliers. Preferential access could improve the competitiveness of Indian products in the US market and support efforts to expand merchandise exports.
The negotiations are expected to receive further attention later this month, with Goyal scheduled to visit the US for the G20 Trade Ministerial in Milwaukee, where bilateral trade issues are expected to feature in discussions with US Trade Representative Jamieson Greer.
The proposed agreement is part of India’s broader strategy to strengthen market access through trade agreements and diversify its export markets. India is simultaneously advancing trade negotiations with several other major economies, seeking to improve the competitiveness of its exporters globally.