India-US Trade Deal Conditioned on Tariff Advantage
Union Commerce Minister Piyush Goyal announced on Thursday that the India-US trade deal has been finalised but will not come into force until New Delhi secures a distinct tariff advantage over competing manufacturing economies such as Vietnam, Thailand, the Philippines, China, Malaysia, Bangladesh, and Sri Lanka. Speaking at the India Global Forum’s UK-India Week 2026: Capital Frontiers conference in London, Goyal emphasised the need for a competitive edge.
“Until that framework of getting that competitive advantage can be finalised, we can’t enter into force a US deal. How the US will find the appropriate tools and legal backing to give us that competitive advantage over our competition, the day that happens, the deal is on,” Goyal said.
Background of the Agreement
India and the US reached an interim trade agreement in February 2026 after months of tariff tensions. Under this framework, the United States agreed to reduce tariffs on Indian exports from 25 percent to 18 percent. In return, India agreed to increase market access for certain US products and strengthen collaboration in energy and defence sectors. Additionally, a 25 percent levy on Indian items linked to imports of Russian crude was immediately lifted.
Goyal clarified that India was originally subject to a 50 percent tariff. “We had negotiated a deal to reduce the 50 percent tariffs to 18 percent, and the whole deal was centered around the competitive advantage we got with that 18 percent over our neighbors and competing countries,” he explained.
Goyal’s Meetings and Legal Framework
Goyal’s remarks follow meetings with US Trade Representative Ambassador Jamieson Greer in New Delhi from June 22 to 24. During these discussions, both parties addressed key aspects of the proposed agreement, including improved market access, digital trade, supply chain resilience, lowering non-tariff barriers, and increased collaboration in critical areas.
“I don’t think anyone has any doubts about our deal, which was completed on February 6. Both the US and India have confirmed it. There is usually some give and take, but the broad contours were set at that time, and our teams have been working to finalize the fine print ever since,” Goyal stated.
Understanding Free Trade Agreements
Goyal explained the rationale behind trade agreements, noting that an FTA is fundamentally about gaining a comparative advantage over competitors to access markets. He stressed that the legal and tariff framework remains the final obstacle before the deal can take effect.
