In a strategic move to solidify its trade relations with the United States, India is prepared to incorporate a rare "forward most-favoured-nation" (MFN) clause into a prospective bilateral trade agreement. This clause would ensure that any favorable trade terms India extends to future partners would automatically apply to the U.S., effectively "future-proofing" the deal.

This initiative underscores India's urgency to finalize an agreement with the Trump administration, particularly in light of proposed 26% reciprocal tariffs that could impact Indian exports. India has already offered several concessions, including reductions on duties for U.S. frozen meat and agricultural products. In return, India seeks reciprocal tariff benefits for its labor-intensive exports and long-term preferential access for sectors such as pharmaceuticals and engineering goods.

Negotiations have progressed, with 19 out of 24 product categories identified for fast-tracking. Indian officials emphasize the country's willingness to go further than it has in talks with other Western partners like the EU, citing strategic intent to capture U.S. market share amid shifting global supply chains.

The anticipation of a trade deal has positively influenced Indian financial markets. On April 29, 2025, the Nifty 50 index rose by 0.28% to 24,394.6, and the BSE Sensex climbed 0.29% to 80,445. This uptick is attributed to growing foreign investment and optimism over the potential U.S.-India trade agreement. Foreign portfolio investors have contributed to this rally, investing $4.1 billion over nine days, marking India's longest buying streak since July 2023.

Despite geopolitical tensions, including recent incidents in Kashmir, markets have remained resilient, focusing instead on positive economic developments and the prospective trade agreement.

As both nations aim to double their bilateral trade to $500 billion by 2030, the inclusion of the forward MFN clause represents a significant step towards a comprehensive and enduring trade partnership.