Six-Month Timeline Likely for First Tranche of Bilateral Trade Agreement
India is expected to take at least six more months to finalize the first tranche of the proposed Bilateral Trade Agreement (BTA) with the United States, delaying the deal well past President Donald Trump’s 90-day pause on country-specific reciprocal tariffs, according to sources close to the negotiation process. The delay significantly reduces the chances of shielding Indian exports from the pending 16% country-specific US duty expected to kick in by early July 2025.
Though both governments have successfully firmed up the Terms of Reference (ToR) for the upcoming BTA, negotiations on sector-specific chapters have yet to begin in earnest. As per officials involved, the United States has not disclosed its full tariff reduction wish list, making it difficult to conclude the deal during the tariff pause window.
Highlights:
India-US BTA likely delayed by at least six months beyond Trump’s 90-day tariff pause.
Pending 16% country-specific US duty on Indian exports may come into effect by July 2025.
Terms of Reference finalized, but key sectoral talks still pending.
Agriculture Tariffs Emerge as the Most Sensitive Negotiating Front
At the core of the delay is the United States’ push for steep tariff reductions on agricultural imports, particularly sensitive commodities like almonds, pistachios, and other farm goods. While India has shown flexibility on multiple US demands, officials remain cautious when it comes to liberalizing tariff barriers in agriculture, a historically protected sector.
This reluctance is rooted in India’s longstanding concern about safeguarding its smallholder farming economy, which was also the central reason for India’s exit from the Regional Comprehensive Economic Partnership (RCEP) in 2021. India had cited the potential adverse effects on its dairy and farm sectors as a key rationale for stepping away from RCEP, which involved the ASEAN bloc and other major economies.
Highlights:
US wants sharp tariff cuts on Indian imports of American farm goods.
Agriculture remains India’s most protected sector in trade negotiations.
India previously exited RCEP over concerns about impact on its farm sector.
Indian Bargaining Strategy: Concessions in Nuts for Gains in Auto, Pharma
In exchange for potential duty cuts on select agricultural products like almonds and pistachios, India is negotiating for tariff concessions on automobile components and essential medicines exported to the US. Indian negotiators aim to protect domestic farm interests while securing access to high-margin export verticals, reflecting a calibrated approach to offset losses with strategic gains.
While Trump has paused his reciprocal tariff hike on approximately 75 nations until early July, the only exemption remains China, signaling the administration’s intent to exert broader tariff pressure. India was hoping to leverage this pause to secure a deal quickly and prevent steep duty impositions on key exports.
Highlights:
India open to lower tariffs on almonds/pistachios in return for cuts on auto parts and medicines.
BTA talks aim for sectoral balance rather than unilateral concessions.
Trump’s 90-day pause excludes China; India seeks to conclude deal within this window.
Trump and Lutnick Hint at Progress, But Final Deal Still Months Away
On April 29, President Donald Trump struck an optimistic tone, saying “talks with India on tariffs were going great” and expressing confidence that both countries would eventually strike a deal. Separately, US Commerce Secretary Howard Lutnick told CNBC that an agreement with one foreign country—widely speculated to be India—had been reached in principle to offset the new reciprocal tariffs.
Lutnick did not explicitly name India, citing that the deal is still awaiting local-level approvals, but sources suggest it aligns with New Delhi’s recent announcement of early-sector wins and in-person engagements beginning late May.
Highlights:
Trump on April 29: “Talks with India are going great,” hinting at progress.
US Commerce Secretary Lutnick claims a deal may be imminent with a foreign nation, possibly India.
India and US planning in-person sectoral negotiations from May-end.
Mission 500 and Sectoral Roadmap Toward Fall 2025 Completion
India’s commerce ministry reaffirmed on April 29 that both sides remain focused on achieving “early mutual wins” with the first tranche of the BTA targeted for completion by Fall 2025. The BTA is part of Mission 500, a new strategic initiative aimed at doubling bilateral trade to $500 billion by 2030.
Virtual expert-level talks have already been conducted, and in-person sectoral discussions are scheduled to begin by the end of May, signaling a roadmap of incremental progress rather than a single-stage resolution. India currently ranks as the tenth largest exporter to the US, with $91 billion in shipments in 2024, making the US India’s largest export destination and fourth-largest source of imports.
Highlights:
India and US aim to finalize multi-sector BTA by Fall 2025.
‘Mission 500’ seeks to double bilateral trade to $500 billion by 2030.
Sectoral talks to accelerate with in-person engagements from May 2025.
