New Delhi: India and the United States have finalised most elements of the legal text for the first tranche of their bilateral trade agreement (BTA), with negotiations now focused on minor details such as "commas and full stops," commerce and industry minister Piyush Goyal said on Monday. However, the treaty, which has been under negotiation for 15 months, will only be sealed after there is clarity on how the Trump administration handles the tariff mechanism once the current 10% levy expires next month.
Section 301 Investigations and Tariff Concerns
While the US is expected to rely on Section 301 of the Trade Act of 1974, under which India faces two probes along with several other countries, the Indian government wants to ensure that its exports maintain a tariff advantage compared to rival nations. The $140 billion trade relationship is moving closer to a new framework agreement.
Separately, India has raised questions about the Section 301 investigations. One probe relates to structural overcapacity in sectors such as solar modules, processed food, steel, and aluminium across 15 countries. The second investigation concerns the alleged failure to act against forced labour by several nations.
US Trade Representative Visit and Negotiation Timeline
US Trade Representative Jamieson Greer is expected to visit India once there is clarity on the new tariff mechanism. The earlier "reciprocal tariffs" imposed by former President Donald Trump under an emergency provision were invalidated after the US Supreme Court deemed them illegal. The current strategy appears to be to finalise the treaty text and then work out the tariff rates once the new mechanisms are in place.
India and the US had agreed to an interim framework in early February, but it was put on hold following the court ruling. American trade negotiators are currently in New Delhi, with three-day talks scheduled to begin Tuesday.
Minister's Statement on Progress
"...mostly everything is finalised. As you know, US Ambassador Sergio (Gor) said that 99% of the things have been finalised. Discussions are going on about small issues, commas and full stops. While finalising, how will the legal changes that have taken place in the US be reflected in the final agreement, and what kind of changes will be made accordingly. After finalising that, I am fully confident that, with the US, we will conclude the first tranche of the BTA as soon as possible, sign it and start further discussions on how to have a more comprehensive BTA," Goyal told reporters.
Trade Statistics
The US is India's largest export destination, with goods worth $87 billion shipped last year, and is the second largest trading partner, with two-way trade of $140 billion. India had a trade surplus of over $33 billion.
