The United States has assured India that it will face lower tariffs than competing trading partners under their proposed bilateral trade agreement, marking a significant breakthrough in negotiations that have dragged on for nearly two years.
A senior Indian government official familiar with the discussions said Washington had agreed to give New Delhi a comparative tariff advantage over its competitors, a condition India had consistently maintained must be met before signing the agreement.
The assurance takes into account potential additional tariffs arising from ongoing US trade investigations into India and other countries, including probes into excess industrial capacity.
The US has also imposed an additional 10 per cent forced-labour tariff on India, alongside countries such as Indonesia, Malaysia, Pakistan and Sri Lanka.
India and the US had agreed on a framework for the first phase of the trade deal in February 2026 following discussions between Prime Minister Narendra Modi and US President Donald Trump.
The joint statement issued at the time committed both countries to providing preferential market access in sectors of mutual interest.
Under the proposed arrangement, the initial phase will focus exclusively on trade in goods, while negotiations on services will be addressed subsequently.
The official disclosed that both countries had also agreed to include a provision allowing either side to review its commitments if the other changes its tariff structure.
The clause, described as unusual in India’s previous trade agreements, is intended to protect both countries against changes in trade policies.
Commerce Secretary Rajesh Agrawal confirmed that a small US delegation visited India in the first week of November for discussions on customs and trade facilitation, describing the outcome as positive.
He said substantial progress had been made, with several outstanding issues resolved and both negotiating teams continuing discussions virtually to settle remaining technical and language-related details.
Commerce Minister Piyush Goyal also expressed confidence in the negotiations, saying India had secured favourable terms and could announce an agreement with Washington quite soon. He had earlier described the proposed arrangement as one of the best trade deals India could secure with the US.
However, New Delhi has maintained its position on sensitive agricultural sectors, particularly dairy, insisting that it would not compromise on protecting its domestic dairy industry or allow genetically modified products into the country.
Both governments are now working towards concluding the agreement by the end of the current Indian financial year.
WWD
