Mumbai: India and the United States have moved closer to finalising the first phase of their trade agreement, with Indian officials saying the legal drafting process is nearing completion. However, differences over tariff arrangements and the need to ensure competitive access to the American market remain important issues before the agreement can be signed.
India's Commerce and Industry Minister Piyush Goyal said on Thursday that the first phase was undergoing final legal drafting. Commerce Secretary Rajesh Agrawal also said negotiations were progressing and expressed hope that the agreement could be signed soon.
The agreement has not yet been formally signed. India is seeking favourable tariff treatment to ensure that its exporters can compete effectively with suppliers from other Asian countries, including Bangladesh, Vietnam and Indonesia.
Indian officials want to ensure that the terms provide meaningful benefits to domestic businesses. They are concerned that Indian exporters could be placed at a disadvantage if competing countries enjoy better access to the US market.
The final structure of US tariffs remains an important issue in the negotiations. Agrawal indicated that the signing timeline would depend partly on the United States clarifying its wider tariff arrangements and on the outcome of relevant investigations into international trade practices.
One issue is the use of Section 301 investigations by the United States. These investigations examine foreign trade practices that Washington considers harmful to American businesses. Their findings could affect trade relations, although the precise impact on the India agreement remains unclear.
US Ambassador to India Sergio Gor has also expressed optimism about the negotiations, saying the two countries were close to reaching an agreement. However, this assessment does not confirm that all outstanding issues have been resolved, and an official signing date has not been announced.
The negotiations follow an interim trade framework announced by the White House on February 6, 2026. The framework outlined plans to reduce certain trade barriers, improve market access and strengthen economic cooperation. It also formed part of wider discussions towards a more comprehensive bilateral trade agreement.
Under the February framework, the United States announced an 18 per cent reciprocal tariff rate for specified Indian goods. The framework also included provisions for removing reciprocal tariffs on certain additional goods, subject to the successful conclusion of the interim agreement.
However, the 18 per cent rate should not be understood as the tariff applicable to every Indian product entering the United States. Different products may be subject to separate tariff measures, exemptions or other conditions. Changes in US tariff policy have also made the final structure an important part of the ongoing negotiations.
The framework outlined proposed Indian concessions on certain American industrial goods, agricultural products and food items. It also identified areas for cooperation in supply chains and other sectors.
India also expressed an intention to purchase $500 billion worth of American products over five years. The proposed purchases covered energy products, aircraft and aircraft parts, precious metals, technology products and coking coal. This was a commitment outlined in the framework, not confirmation that the entire amount has already been purchased.
Trade between the two countries remains significant. Indian goods exports to the United States reached $42.79 billion between April and August 2026, compared with $40.39 billion during the same period a year earlier. This represents an increase of about 5.9 per cent.
India recorded a trade surplus of nearly $34 billion with the United States during the 2025 to 2026 financial year. A trade surplus occurs when a country exports more than it imports. The figure highlights the importance of the American market to Indian businesses.
India's purchases of Russian oil have also affected the wider trade relationship. In February, the United States removed an additional 25 per cent duty that had been imposed in connection with India's purchases of Russian oil. The order also allowed for the possibility of further action if India resumed importing Russian oil under the conditions specified by Washington.
More recently, reports have highlighted the possibility of additional US tariff measures linked to Russian oil purchases, including a measure that could allow tariffs of up to 100 per cent on Indian goods. However, the possibility of such action should not be confused with a confirmed 100 per cent tariff currently imposed on all Indian imports.
For India, securing stable and competitive access to the American market is important for exporters seeking to expand their international sales. For the United States, the negotiations form part of wider efforts to address trade imbalances and secure better terms for American producers.
The next important step will be confirmation from both governments that the first phase has been signed, along with details of the final tariff arrangements and the date on which its provisions will take effect. Until then, the negotiations represent significant progress, but the broader trade agreement remains unfinished.