New Delhi—Union Commerce Minister Piyush Goyal announced Thursday that India and the United States will finalize and sign a joint statement on their first tranche bilateral trade agreement within the next four to five days. This marks a significant milestone in de-escalating a months-long trade dispute that has strained the two nations' economic relationship, bringing both countries closer to a comprehensive trade framework aimed at boosting bilateral commerce to $500 billion by 2030.
Key Facts
• Joint statement expected within 4-5 days; formal legal agreement targeted for mid-March 2026
• US tariffs on Indian goods will reduce from 50 percent to 18 percent via executive order after joint statement is signed
• India's sensitive sectors including agriculture, dairy, and fisheries have been safeguarded from American imports
The announcement came as Goyal addressed media during the signing ceremony of the Terms of Reference for a Free Trade Agreement between India and the Gulf Cooperation Council. Negotiations between the two countries have been ongoing for nearly a year following Prime Minister Narendra Modi's February 2025 visit to the United States.
Goyal emphasized that discussions between India and the United States have been "very meaningful" and that both nations' leadership has made clear decisions to move forward. The first tranche represents the initial phase of what officials describe as groundbreaking economic cooperation between the strategic partners.
The formal legal agreement is currently being drafted and could require approximately one to 1. 5 months to finalize completely.
Once the joint statement is released, the US President will issue an executive order reducing the reciprocal tariff from 50 percent to 18 percent, providing immediate relief on trade barriers.
India's tariff reductions, however, will only take effect after the formal legal agreement is signed. Commerce Secretary Rajesh Agrawal explained that India's tariff reductions are classified as Most Favored Nation (MFN) tariffs, which require a legal agreement, while US tariffs are executive tariffs that can be implemented via executive order.
Goyal highlighted India's massive procurement plans, noting that orders for US aircraft and engines alone would cross $100 billion. India's total procurement from the United States over the next five years is projected to reach around $2 trillion, with the US expected to supply approximately $500 billion under this broader trade framework.
The agreement addresses longstanding grievances from both sides. The US had previously imposed 50 percent tariffs on Indian goods, comprising a 25 percent punitive tariff over India's purchases of Russian oil and a 25 percent reciprocal tariff.
The new deal will eliminate the Russian oil-related tariff entirely while reducing the reciprocal tariff to 18 percent.
Goyal stated, signaling confidence in the timeline and commitment from both governments.
This trade agreement carries significant geopolitical implications, strengthening the India-US partnership at a time when both nations seek to balance their economic relationships. For India, the deal protects critical sectors employing millions of farmers and small businesses while opening new markets.
For the United States, the agreement solidifies India's position as a key Indo-Pacific partner and integral member of the Quad grouping.
Do You Know?
The India-US trade deal is positioned as the first step toward a broader comprehensive trade agreement. Once the first tranche is completed, both countries can potentially negotiate additional concessions, with India's government explicitly stating it wants to
This phased approach allows both nations to test their trade relationship before committing to deeper market integration.
Key Terms
• Bilateral Trade Agreement: A commercial agreement between two countries to reduce trade barriers and increase trade volumes
• First Tranche: The initial phase or portion of a larger agreement, allowing for staged implementation
• Executive Order: A directive issued by the US President that carries the force of law without requiring Congressional approval
• MFN Tariffs: Most Favored Nation tariffs are equal rates applied to all trading partners, ensuring non-discriminatory trade treatment
• Reciprocal Tariffs: Tariffs designed to match or respond to another country's tariff rates, creating balanced trade terms
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