Union Minister of Commerce and Industry Piyush Goyal. File.
| Photo Credit: PTI

The announcement to negotiate a bilateral trade agreement between India and the U.S. has boosted business confidence in both countries, as it can help further strengthen economic ties by leveraging their competitive strengths, Commerce and Industry Minister Piyush Goyal said on Sunday (February 16, 2025).

During the recent visit of Prime Minister Narendra Modi to Washington, India and the U.S. announced to more than double the two-way commerce to $500 billion by 2030 and negotiate the first tranche of a mutually beneficial, multi-sector bilateral trade agreement (BTA) by fall of 2025.

“The Prime Minister has brought back with him an agreement or an understanding to enter into a trade deal by fall of this year. I think, it gives a lot of confidence and a lot of relief to every business person in the US and in India who believe that together, we can truly transform world trade, together with our competitive strengths in different areas, we can truly work as two friends, as two partners for progress and prosperity,” Mr. Goyal said.

Normally in a free trade agreement, two trading partners either eliminate or significantly reduce customs duties on the maximum number of goods traded between them. Besides, they also ease norms to promote trade in services and boost investments.

During the first term of U.S. President Donald Trump, the two countries had discussed a mini-trade deal, but it was shelved by the Joe Biden administration as they were not in favour of such pacts.

The Commerce Minister also said that India is expanding and forging new partnerships across the world with new trade agreements with the developed world including with Australia, the UAE, and EFTA bloc.

The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.

“The progress we are making in other engagements with Europe, and the progress we will soon make with the US as we proceed to finalize a trade deal by fall of this year, are all reflective of India’s growing relevance at the global stage,” he said at the ET Now Global Business Summit here.

In 2023, the U.S. and India bilateral trade in goods and services stood at $190.08 billion ($123.89 billion goods and $66.19 billion services trade). In that year, India’s merchandise exports to the U.S. stood at $83.77 billion, while imports were $40.12 billion, leaving a trade gap of $43.65 billion in favour of India.

The country’s services export to America was $36.33 billion in 2023, while imports were aggregated at $29.86 billion. The trade gap (difference between imports and exports) was $6.47 billion in favour of New Delhi.

Further, he said that the Government is taking a series of steps to boost domestic manufacturing.

“The Make in India story is now going to be led by a National Manufacturing mission, which will come up with newer ideas and address the challenges that manufacturing in India faces (by) MSMEs or otherwise, and ensure that making in India becomes more competitive,” he added.

Although U.S. President Trump had a warm relationship with PM Modi in his first term, he has called India a “very big abuser” on trade and his levies on steel and aluminum hit India particularly hard. File
| Photo Credit: Reuters

Prime Minister Narendra Modi will come bearing gifts when he meets U.S. President Donald Trump on Thursday (February 13, 2025), hoping concessions on tariffs, fresh business deals and the prospect of cooperation on China will win Mr. Trump’s favor.

Mr. Trump, not yet one month into his presidency, has wielded the threat of tariffs against friend and foe alike to try to extract new trade deals, investment or law enforcement help.

Also read: PM Narendra Modi U.S. visit live updates

India may not be an exception: Although Mr. Trump had a warm relationship with PM Modi in his first term, he has called India a “very big abuser” on trade and his levies on steel and aluminum hit India particularly hard.

Ahead of his White House meeting on Thursday (February 13, 2025), PM Modi has readied promises including increased liquefied natural gas, combat vehicle and jet engine purchases, according to Indian government officials who declined to be named.

Indian officials are also looking at trade negotiations, possible deals on U.S. agriculture exports to India and investment in nuclear energy, along with tariff cuts in at least a dozen sectors, including electronics, medical and surgical equipment, and chemicals.

Those are areas Mr. Trump’s team believes India needs to make improvements, according to another person familiar with their thinking.

It’s a “gift” for Mr. Trump, said one of the sources, who declined to be named as they previewed a private meeting.

For his part, PM Modi wants help with the case of billionaire Gautam Adani, an ally of his who was indicted by the Justice Department in November over an alleged bribery scheme. Mr. Adani denies wrongdoing.

Another thorny issue will be in the background: the alleged intelligence plot to assassinate a Sikh activist Hardeep Singh Nijjar in the United States during the administration of Mr. Trump’s predecessor, Joe Biden.

Also read: White House officials meet Sikh activists before PM Modi’s U.S. visit

This time, the tariff issue will be front and center, said Richard Rossow, head of the India program at the Center for Strategic and International Studies, a Washington think tank.

“It’s going to be a boxing match,” he said. “I think India is willing to take a few hits, but there’s a limit.”

The U.S. has a $45.6 billion trade deficit with India. Overall, the U.S. trade-weighted average tariff rate has been about 2.2%, according to World Trade Organization data, compared with India’s 12%.

Mr. Trump’s administration has vowed reciprocal tariffs on every country that charges duties on U.S. imports, a move that will ratchet up fears of a widening global trade war.

What Trump wants?

Mr. Trump wants more assistance from India on unauthorized immigration. The country is a major source of immigrants to the United States, including a large number in the tech industry on work visas and others in the U.S. illegally.

PM Modi is expected to meet one-on-one with Elon Musk during his trip to Washington, two people familiar with the plans told Reuters. The billionaire is a key Mr. Trump ally and his Starlink company’s bid to enter the South Asian market could come up for discussion.

India may prove critical to Mr. Trump’s strategy to thwart China, which many in his administration see as the top U.S. rival. India is wary of neighboring China’s military buildup and competes for many of the same markets. PM Modi also worries that Mr. Trump could cut a deal with China that excludes India, according to Mukesh Aghi, president of the U.S.-India Strategic Partnership Forum lobbying group.

Also read: Starlink steals a march into Bhutan

“Even though much of the talk will be on the bilateral relationship, on trade, on immigration, defense purchases, the China thread will weave through the meeting,” said Lisa Curtis, an India-focused former White House official during the first Mr. Trump administration now with the Center for a New American Security think tank.

Still, India tries to avoid direct confrontation with Beijing and maintains a foreign policy of “strategic ambiguity” to avoid picking sides in major international conflicts.

That approach has also meant that India has continued its ties with Moscow as it carries out its war with Ukraine. India has remained a major consumer of Russian energy, for instance, while the West has worked to cut its own consumption since the war started.

Mr. Trump spoke on Wednesday (February 12, 2025) with both Russian President Vladimir Putin and Ukraine’s Volodymyr Zelenskyy about starting negotiations to end the war in Ukraine.

The U.S.-India meeting will offer clues as to what, if any, pressure Mr. Trump wants major outside powers to apply to advance those talks.