India–US Trade Deal 2025 : Status and Key Issues

Current Stage of Negotiations

• India and the United States are close to concluding a limited trade package, with both sides ironing out differences on market access and tariffs.
• The legal drafting process for the agreement has begun, signalling that the contours of the first tranche are largely agreed upon.
• India has stressed that the deal must serve long-term strategic and economic interests, and not be rushed for symbolic timelines.

Tariff-Related Concerns

• The United States imposed high tariff duties in August 2025, including:
  • A 50% tariff on selected Indian products.
  • An additional 25% punitive tariff linked to India’s discounted purchase of Russian crude.
• India is negotiating for tariff reductions so that its exports are not disadvantaged compared to competitors in Asia.
• India’s position is to retain policy autonomy while expanding market access to the US.

Non-Tariff Barriers

• The US has raised concerns about India’s Quality Control Orders (QCOs), which it argues restrict entry of US farm and industrial goods.
• India maintains that QCOs are required for consumer safety, standardisation, and preventing substandard imports.
• Discussions on non-tariff barriers are sensitive, and both sides have not publicly disclosed the details.

Diplomatic Engagements and Negotiation Format

• Negotiations currently continue through virtual rounds, with the next physical round yet to be scheduled.
• Recent discussions in Washington involved senior officials of India’s Commerce Department.
• Speculation about a bilateral meeting between the Prime Minister of India and the US President at the ASEAN Summit was ruled out, as India opted for virtual participation.

Strategic and Economic Significance

• The agreement is expected to:
  • Restore predictable trade relations after disputes at the WTO.
  • Rebuild trust following the suspension of certain trade concessions under the Generalized System of Preferences (GSP).
  • Strengthen India’s market position by expanding access to US agricultural, textile, engineering, and IT services markets.
• For the US, the deal aims to secure greater access to India’s fast-growing consumer market, especially in agriculture, medical devices, and energy.

Forward Timeline

• The official target for concluding the first tranche of the India–US Trade Agreement is set for Fall 2025.
• Both sides aim for a phased approach, where the initial package sets the groundwork for a broader, more ambitious trade agreement later.