India has finalised the first phase of its trade agreement with the United States, bringing months of negotiations closer to a conclusion. But New Delhi has made clear that the agreement will take effect only when Indian exporters secure tariff terms that leave them better placed against competing economies.
Commerce and Industry Minister Piyush Goyal confirmed on October 15 that the first tranche had entered its final legal drafting stage. Addressing an event in New Delhi, he said the government hoped to complete the remaining work and operationalise the agreement once India obtained a competitive advantage over its peers.
The announcement marks progress in negotiations that have repeatedly encountered difficulties over tariffs, market access and changing US trade policies. India has resisted concluding an arrangement that would lower duties without giving its manufacturers a meaningful advantage in the American market.
The commercial stakes are considerable. According to the US Trade Representative's 2026 National Trade Estimate Report, goods trade between the two countries reached approximately $149.4 billion in 2025. US imports from India accounted for $103.8 billion, compared with American exports of $45.6 billion.
For Indian manufacturers, access to the American market is only part of the equation. Exporters of textiles, footwear, leather goods and other price-sensitive products compete directly with suppliers in Vietnam, Bangladesh and several other Asian economies. Even a modest tariff disadvantage can make Indian goods less attractive to American importers.
New Delhi's position has remained consistent throughout the negotiations, with preferential tariff treatment over competing Asian exporters forming a central condition for concluding the pact.
The foundations of the agreement were laid in February, when Prime Minister Narendra Modi and President Donald Trump announced an interim trade framework. Under the joint statement issued by both governments, Washington committed to an 18% reciprocal tariff rate on specified Indian products, including textiles, apparel, leather, footwear and certain machinery, while offering the prospect of further tariff relief for other categories.
India, in return, agreed under the framework to reduce or eliminate duties on American industrial products and selected agricultural goods. The proposed arrangement also covers regulatory barriers, customs procedures and cooperation in strategic industries.
Negotiating teams continued working through these provisions in subsequent months. During US Trade Representative Jamieson Greer's June visit to New Delhi, discussions covered market access, digital trade, supply-chain cooperation and the removal of non-tariff barriers.
The remaining legal work comes as both governments seek greater certainty in a trade relationship repeatedly affected by American tariff decisions. India's objective is to secure concessions that give its exporters predictable and competitive access, rather than a reduction that could be offset by preferential terms offered to rival countries.
The first phase has now moved beyond negotiating its broad terms. What remains is the legally settled agreement, confirmation of the tariff treatment India will receive and a date on which businesses can begin using its provisions.
