India and US Finalize Terms of Reference for Trade Pact, Says USTR
- MGMMTeam
- 2 hours ago
- 3 min read
India and the US have finalized the terms of reference for the negotiations of the proposed Bilateral Trade Agreement (BTA), according to an announcement made by US Trade Representative Jamieson Greer on Tuesday. This follows a meeting between US Vice President JD Vance and Prime Minister Narendra Modi in New Delhi.
Greer emphasized that the negotiations aim to foster "balance and reciprocity" by opening up new markets for American goods and addressing "unfair practices" that harm US workers.
“India's constructive engagement so far has been welcomed, and I look forward to creating new opportunities for workers, farmers, and entrepreneurs in both countries," he said.
"I am pleased to confirm that USTR and India's Ministry of Commerce and Industry have finalised the Terms of Reference to lay down a roadmap for the negotiations on reciprocal trade," Greer said.
He stated that there is a "significant imbalance" in the trade relationship with India.
Notable Advancements Towards BTA
After the meeting between PM Modi and Vance on Monday, the US released a statement highlighting that they have made "significant progress" in finalizing a trade deal that will benefit both nations.
Union Finance Minister Nirmala Sitharaman, currently in the US, also mentioned that both parties aim to complete the first phase of the trade agreement by September or October this year.
US Concerns Regarding India
The US has pointed out that numerous trade barriers with India still exist. A USTR report reveals that the US faced a trade deficit of $45.7 billion in goods with India in 2024, marking a 5.1% increase (or $2.2 billion) compared to 2023.
“The US welcomed the tariff reductions India implemented during the Prime Minister's (Narendra Modi) meeting with President (Donald) Trump in February and its willingness to further reduce tariffs on US products as part of the BTA," the statement said.
The USTR states that the Trump administration aims to enhance access to Indian markets, reduce tariffs and non-tariff barriers, and establish robust new rules to ensure lasting benefits.
India-US trade: An overview
According to the USTR report, the total trade in goods between India and the US was valued at $129.2 billion in 2024. India’s average tariff on imports stands at 17 percent, which is among the highest among major economies, whereas the US has an average tariff of just 3.3 percent.
In the case of agricultural products, India imposes an average tariff of 39 percent, while the US applies a tariff of only 5 percent, the report highlights.
"In addition to tariffs, technical barriers to trade, regulatory barriers, and restrictions on access to the market in the services, industrial, and agricultural sectors also reduce US exports to India," the report added.
Trump tariffs
On April 2, President Trump of the United States imposed a 10 percent baseline tariff on all countries, with higher tariffs set for nations with significant trade deficits with the US. Trump stated that this action was intended to "level the playing field."
"The ToR (Terms of Reference) announcement with India is a critical step forward in negotiations with India to achieve reciprocal trade with one of our most strategic partners and deliver results to the American People," the statement said.
The Terms of Reference cover areas like tariffs, non-tariff barriers, rules of origin, and streamlining customs procedures.
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