NEW DELHI
:
India is set to finalize a framework agreement on reciprocal tariffs with the US by the end of this year, Commerce Minister Rajesh Agrawal said, marking a major step towards resolving an issue that has strained bilateral trade between the two countries.
The two countries are making steady progress on the deal running alongside broader talks on a bilateral trade agreement, and the government is pursuing “two separate parallel tracks” with Washington, Agrawal said on Friday.
“While a comprehensive trade agreement will take longer due to its broad scope, the framework agreement – aimed specifically at addressing mutual tariff challenges – has moved to an advanced stage,” he said speaking at an event organized by industry lobby Ficci.
US President Donald Trump initially announced a 25% reciprocal tariff on India in April, but in August imposed an additional 25% on purchases of Russian oil, bringing the total tax on Indian goods to 50%. The tariffs hit India’s exports to the US, particularly from labor-intensive industries such as garments, leather, gems and jewellery. Shipments to the US account for roughly 2% of India’s GDP.
“We are very optimistic and hope that we should find a solution within this calendar year. Over the last few months, we have worked deeply with the US teams and tried to solve most of the problems. Now it is only a matter of time to find the right landing zone for both countries,” the trade minister said at the event.
“Progress on the framework agreement will support and contribute to greater bilateral negotiations.”
Export trends, tariff impacts
New Delhi and Washington have been negotiating a bilateral trade deal since it was announced on February 13 during Prime Minister Narendra Modi’s visit to Washington. At the time, the two leaders issued a joint statement pledging to increase bilateral trade to $500 billion by 2030.
Despite volatility in global trade, Agrawal said India’s merchandise exports reached $26.491 billion in the first seven months of the fiscal year, compared to $469 billion in the same period last year.
He pointed to the ability of Indian exporters to diversify markets following the imposition of US tariffs and cited a 60% jump in shrimp exports to the European Union (EU). The upcoming India-EU summit in January is expected to give further impetus to trade talks between India and the EU. Both sides have previously pledged to conclude talks by the end of December.
Meanwhile, India’s exports to the US showed signs of recovery in October after four straight months of decline, even as broader exports remained muted and the country’s import bill swelled on a surge in gold and silver supplies.
Commerce Department data showed India’s goods exports to the US reached $6.3 billion in October, up 14.5% from September, the first month-on-month increase since May, despite Washington’s 50% tariff on most Indian goods.
However, according to Global Trade Research Initiative (GTRI) co-founder Ajay Srivastava, the $6.3 billion figure is down from the $6.9 billion recorded in October 2024. Dhirenra
Punitive US tariffs cast a shadow over India’s trade growth as the goods trade deficit widened to an all-time high in October. The trade gap widened sharply to $41.68 billion last month, from $32.15 billion in September and $26.2 billion a year earlier, according to Commerce Department data.
Mint On October 22, it announced that India and the United States were nearing a long-stalled trade deal that would reduce US tariffs on Indian imports to 15-16% from a steep 50%. Energy and agriculture have emerged as key issues on the negotiating table, and India may agree to a gradual reduction in Russian oil imports.
