By T N Ashok
WASHINGTON: India will be one of the earliest countries to clinch a mega trade deal with the United States under the watchful eye of the latter’s president Donald Trump, who is happy and cautious, as Commerce Secretary Howard Lutnick and his counterpart Piyush Goyal work out the nitty gritties of the “Art of the Deal.” That would make US goods more affordable in India and also grant greater market access to US companies in emerging fields in India.
India and the US are working hard to hammer out a trade deal as soon as possible , though such negotiations take a long time and come to fruition years later , the negotiations are at an advanced stage. They aim to take the annual bilateral trade between the two countries from the current $190 billion to a massive $500 billion by 2030 – and hence aptly titled ‘Mission 500’. U.S. sources say that Prime Minister Narendra Modi is keen to conclude the interim deal by July 9 the expiry date of the 90 day pause on reciprocal tariff imposed by Trump in April this year.
After his recent meeting with India’s trade minister Piyush Goyal, US commerce secretary Howard Lutnick said “India has one of the most extraordinary economies”. “The key that makes an extraordinary economy is the determination of the people. How much do your people care about being in business? How entrepreneurial are they? How much do they drive to be better for their families?” he said, adding that “From what I know about India, the core population of India has that drive and ambition, and that’s why the Indian economy will always continue to grow and thrive because it has that from the underpinning and so you can do things in India that many other countries, you just can’t get done.”
Lutnick, a billionaire drafted by Trump into his cabinet for his rare insights into global trade, went on to say that India and the United States are close to finalizing a trade pact. “I think to be in a very, very good place, you should expect a deal between the United States and India in the not-too-distant future because I think we found a place that really works for both countries.” Lutnick’s comments are indicative of the swiftness with which negotiations are progressing to thrash out an early thats mutually beneficial to both countries and also as the US promises massive concessions in terms of low tariffs for early deal makers. The Early Bird gets the Worm.
Past trade negotiations between the two countries have hit bottlenecks and roadblocks witnessed including punitive reciprocal tariffs imposed by President Trump. India along with China is the largest exporter of pharma goods to the United States which sustains the lifeline of medicines in US from diabetes treatment to cancer.
India has been crying foul over the 27% tariffs, quite negligible compared to 125% on China (later scaled to 250%) now dropped to 30%, 50% on EU goods. But the US is likely to reduce this provided India grants greater access to the defence Industry in India, diversifying supplies from Russia now to western nations.
Though the US-India pact has been many years in the making, the deal could prove to be a game changer for India. Several sectors like pharmaceuticals and agriculture which have a high degree of demand in the US market are set to see an uptick. Experts believe there is a significant upside for India’s agricultural exports, which are currently valued at $4 billion.
‘Mission 500’ is being viewed by stakeholders as more than just a trade pact. It is being seen as a vision for greater bilateral investment in both countries, as policymakers streamline processes allowing for easier movement of capital.
Greater flow of capital and investments, coupled with higher access to American markets will create important avenues of growth for Indian businesses. While goods from sectors like engineering – which is one of the largest in terms of export to the US – will benefit, the true potential for growth lies in labour intensive sectors like footwear, garments, textiles, and electronics that will act as a catalyst for broad-based growth.
For Indian consumers, the pact will allow American products including high-end fashion brands to become more affordable. Duty cuts are likely to make several American FMCG or fast-moving consumer goods cheaper as well. This includes dairy products from brands like Danone and Land O’Lakes. The US alcohol industry will also gain significantly, with Bourbon whiskey brands like Jack Daniels and Jim Beam seeing a drop in prices in the Indian market.
Jack Daniels is one of the most sought-after bourbon whiskeys in Indian bars from the elite five-star hotels to upmarket social clubs. They have disappeared from Canada and have been replaced with fizzy drinks like cranberry juice mixed with sparkling water to taste something between Coke and JD. The US has plenty to spare to export and drop prices.
Once the deal fructifies, it will likely lead to greater opportunities for India and the US to align with global supply chains disrupted by the two wars — Gaza and Ukraine. More so since tariffs on China, reduced from 125% to 30%, still remain high, affecting investor sentiment and global businesses. Currently India faces a 27% tariff on goods imported from the US.
Expectations are that the US will allow this to drop to 20% if India also drops tariffs reciprocally on goods imported from the US mainly agricultural goods, which it is likely to concede, trade circles indicated. While the broad outlook for the trade pact remains positive, for Indian policymaker’s twin concerns remain. Free flow of labour and data remains a challenge due to the divergent views of New Delhi and Washington partly because of the present political climate in America.
After concluding a crucial trade pact with the UK, India is now giving priority to having trade agreements with both the US and the European Union – the two largest trading partners for India. Speaking about this in New Delhi, trade minister Piyush Goyal said last week that “We are well on track in our bilateral trade agreement with the US and making fast progress with EU.” India’s economic forecast has said that a successful trade pact with the US will “turn the current headwinds into tailwinds”.
Mr Lutnick noted that trade agreements typically take two to three years to negotiate, but that this deal may be concluded in a much shorter time frame. “You should expect a deal between the United States and India in the not-too-distant future,” he said, attributing the accelerated pace to the presence of capable negotiators on both sides.
The Commerce Secretary also highlighted that countries concluding deals earlier in the negotiation cycle tend to receive more favourable terms. “Earlier countries get a better deal. That’s the way it is. I think India is trying hard to be one of the earlier countries, which I appreciate,” he said.
Negotiations between India and the US are gaining momentum, with a US delegation scheduled to visit New Delhi on 5–6 June for the next round of discussions on the proposed Bilateral Trade Agreement (BTA), according to Indian government sources. The talks are progressing well and could lead to the signing of the first phase of the BTA in July.
The most recent high-level engagement between officials from India’s Department of Commerce and the Office of the US Trade Representative took place in Washington, DC, from 23–25 April 2025. Topics discussed included both tariff and non-tariff barriers, and the meetings were described as productive. The BTA is expected to serve as a foundation for future trade expansion, with both nations committing to a shared goal dubbed “Mission 500” — a plan to increase bilateral trade to $500 billion by 2030.
While details of the trade deal are still under negotiation, Mr Lutnick stated that the United States is seeking “reasonable access to the markets of India” and aims to reduce the existing trade deficit. In return, India is expected to seek preferential access to certain sectors in the US market. India has a trade surplus of about $45 billion in its favour against the US which Trump wants to reduce by accelerating American exports to India.
Mr Lutnick also suggested that India is well-positioned to benefit from a shift in US manufacturing priorities. “There are enormous numbers of industries that we’d really like to go to India,” he said, indicating that the trade deal may offer India competitive tariffs and special market access in key product categories. Lutnick pointed out that political considerations, such as sensitivities around agricultural imports, are being addressed to create a mutually acceptable arrangement. “We’ve found a path that is acceptable politically at home.”
The Secretary also acknowledged India’s strategic reorientation in defence procurement and monetary policy as signs of improving alignment with the United States. “India is starting to move towards buying military equipment from the United States, which goes a long way,” he said, adding that India’s reduced emphasis on alternatives to the US dollar further signalled closer ties.
Indian industrial leaders have welcomed the news of a possible trade deal. Kumar Mangalam Birla, Chairperson of the Aditya Birla Group, said Mr Lutnick was “very positive about the India-US equation” and that the anticipated agreement could strengthen bilateral cooperation. Indian Commerce and Industry Minister Piyush Goyal, speaking from France, confirmed that India was actively working towards a final agreement. “Both countries are committed to work together, and both desire to give preferential access to each other’s businesses.”
The United States has remained India’s largest trading partner for four consecutive years. In the 2024–25 financial year, bilateral trade reached $131.84 billion, with India recording a trade surplus of $41.18 billion, according to data cited by the Indian media.
The proposed agreement would mark a significant milestone in the economic relationship between the two democracies, potentially unlocking new opportunities for investment, manufacturing, and market access in both directions. It also reflects broader geopolitical trends, with both countries increasingly aligned on strategic and economic fronts.
In FY24, the bilateral trade between India and the US stood at a record US$ 118.2 billion as against US$ 128.78 billion in FY22. In FY24, India had a trade surplus of US$ 36.8 billion with the US. Of the total trade in FY24, Indian exports to the US stood at US$ 77.5 billion, while American exports to India stood at US$ 40.7 billion. USA is the 3rd largest investor in India with cumulative FDI inflows of US$ 67.76 billion from April 2000-September 2024.
India exported 7,346 commodities to the US in FY24. India’s export to the US increased from US$ 77.5 billion in FY24. Major exported items from India to the US include Engineering goods (US$ 17.6 billion), Electronic goods (US$ 10.0 billion), Gems and Jewellery (US$ 9.90 billion), drug formulations and biologicals (US$ 8.72 billion, petroleum products (US$ 5.83 billion), and RMG cotton including accessories (US$ 4.71 billion), among others in FY24.
India’s export to the US stood at US$ 52.95 billion during April-November 2024. Major exported items from India to the US include Engineering goods (US$ 12.33 billion), Electronic goods (US$ 6.79 billion), Drugs and Pharmaceuticals (US$ 6.34 billion), Gems and Jewellery (US$ 6.28 billion), and RMG cotton including accessories (US$ 3.32 billion), etc. from April-November 2024.
India imported 5,749 commodities from the US in FY24. Imports from the US to India rose to US$ 40.7 billion in FY24. India’s imports from the US include mineral fuels and oils (US$ 12.9 billion); followed by pearls, precious, and semi-precious stones (US$ 5.16 billion), nuclear reactors boilers and machinery (US$ 3.75 billion), electrical machinery etc. (US$ 2.38 billion) in FY24.
Imports from the US to India stood at US$ 29.63 billion in April-November 2024. India’s imports from the US include mineral fuels and oils (US$ 9.98 billion); followed by Pearls and Semi-precious stones (US$ 3.21 billion), nuclear reactors and boilers (US$ 2.81 billion), electrical machinery and equipment (US$ 2.02 billion), etc. in April-November 2024. (IPA Service)
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