(Commonwealth_India) India and the United States are advancing their economic engagement through active negotiations on a comprehensive trade agreement intended to grant preferential market access to businesses in both countries. Commerce and Industry Minister Piyush Goyal recently confirmed that the two governments are working closely to create a robust framework that will facilitate trade liberalization, improve access to key markets, and address longstanding tariff-related challenges. The agreement, currently under discussion, is positioned to symbolize a major shift in bilateral trade relations, which will promote cooperation in sectors such as advanced manufacturing, agriculture, digital services, and technology.
During his official visit to France, Goyal underscored the shared commitment of both New Delhi and Washington to broaden market opportunities and reduce existing trade barriers. The envisioned agreement aims to establish a transparent and predictable regulatory environment, enhance competitiveness, and create favorable conditions for cross-border investment and enterprise growth. By fostering a level playing field, the agreement is expected to encourage the increased participation of small and medium-sized enterprises, along with large industry players, in both economies.
The dialogue around preferential market access gains particular relevance at a time when India and the United States are seeking to scale up their trade relationship significantly. With bilateral trade currently valued at approximately USD 191 billion, both countries have articulated a shared objective of raising this figure to USD 500 billion by the end of the decade. To that end, the first phase of the proposed trade agreement is targeted for completion by the fall of 2025, providing an initial structure for deepening economic ties.
These negotiations are taking place amid rising trade tensions linked to tariff measures. U.S. President Donald Trump recently announced a substantial increase in tariffs on steel and aluminum imports, raising them from 25 percent to 50 percent, effective June 4, 2025. These measures are anticipated to impact Indian exports significantly, particularly those involving value-added steel products, automotive components, and aluminum goods. In the fiscal year 2024–25, India’s exports of iron, steel, and aluminum to the U.S. exceeded USD 4.5 billion, with over USD 3.1 billion attributed to finished metal goods alone.
In response to the revised U.S. tariff regime, India has formally notified the World Trade Organization of its intention to preserve the right to impose countermeasures should bilateral efforts to address the issue prove unsuccessful. Despite the potential for friction, both sides have expressed confidence in diplomatic engagement as the preferred mechanism for resolving trade disputes and progressing toward a comprehensive resolution.
As part of this broader strategy, a U.S. trade delegation is currently in India to participate in high-level consultations focused on finalizing an interim agreement by June 2025. India is seeking full exemption from the 26 percent reciprocal tariff currently applied to its exports, arguing that such measures constrain market access and disproportionately affect Indian producers. The proposed interim pact is intended to lay the groundwork for the full agreement and reaffirm the mutual intent to foster deeper economic cooperation.
In parallel, India’s chief trade negotiator, Rajesh Agrawal, conducted an official visit to Washington for technical and policy discussions, followed shortly thereafter by Minister Goyal’s own visit to accelerate progress. These engagements reflect the importance both governments place on establishing a stable and forward-looking trade partnership that supports long-term growth.
While India continues to deepen trade relations with the United States, it is simultaneously expanding its global economic footprint through strategic trade agreements. A key recent example is the Trade and Economic Partnership Agreement concluded with the European Free Trade Association, comprising Switzerland, Norway, Iceland, and Liechtenstein. Under the agreement, EFTA countries have committed to investing USD 100 billion in India over the next 15 years to promote industrial development, technology transfer, and capital inflows. Minister Goyal clarified that this investment commitment pertains strictly to foreign direct investment, excluding speculative flows from institutional investors.
The long-term impact of the agreement is expected to catalyze further investments totaling up to USD 500 billion across infrastructure, renewable energy, logistics, and related sectors, thereby contributing to India’s broader development objectives. India has also agreed to reduce duties on specific imports from EFTA countries, including luxury items such as Swiss watches, premium chocolates, and cut and polished diamonds.
When asked whether a similar investment-linked framework would be adopted in India’s ongoing negotiations with the European Union, Goyal noted that such a model may not be necessary, given the already substantial presence of European investments in India. Instead, the EU agreement may focus on a distinct set of priorities reflecting existing economic ties.
India’s evolving trade policy reflects a strategic pivot toward building durable, investment-driven partnerships that foster technological innovation and sustainable development. In an increasingly complex global trade environment, the country is positioning itself as a reliable partner committed to fair, open, and balanced trade. If successfully concluded, the India–U.S. trade agreement will not only strengthen bilateral ties but may also serve as a model for India’s future trade relationships across the globe.
